Annual report

2016-17

Making
Sustainable
Living
Commonplace
OUR PURPOSE
HINDUSTAN UNILEVER LIMITED HAS A CLEAR PURPOSE TO MAKE SUSTAINABLE LIVING COMMONPLACE.
WE BELIEVE THIS IS THE BEST WAY TO CREATE LONG-TERM VALUE FOR ALL OUR STAKEHOLDERS, ESPECIALLY IN A
VOLATILE AND UNCERTAIN WORLD.
Our Purpose inspires our Vision to accelerate growth in our business, while reducing our environmental footprint and increasing our positive social
impact. We want our business to grow, but we recognise that growth, at the expense of people or the environment, is both unacceptable and commercially
unsustainable. Sustainable growth is the only acceptable model for our business.
Our Purpose and Vision combine a commercial imperative to succeed against competition, with the changing attitudes and expectations of consumers.
This Annual Report and Accounts explains how, in 2016-17, we have continued to pursue our Purpose and work towards making our Vision a reality.
During the year, we continued to deliver growth that is consistent, competitive, profitable and responsible. This track record of long-term success is
underpinned by the Unilever Sustainable Living Plan (USLP), which helps us manage risk, inspires brand purpose and innovation, drives down costs to
improve returns and builds trust among consumers across our categories and operations.
Our success depends on the expertise and talent of our people. They are constantly challenged by an environment that remains volatile, uncertain,
complex and ambiguous. Digitisation is impacting all aspects of life. At the same time, it is getting easier to enter our industry. The market is fragmenting
as a result of changes in consumer habits, sales channels and the media. This is why the Company is also changing through the business transformation
programme, Connected 4 Growth, which we started to implement during 2016. It is creating a business which is more consumer and customer-centric,
faster, more efficient and empowered so that our people can meet these challenges with the necessary resources.
As part of this change, we are adopting new ways of working to be more entrepreneurial to complement our existing category strategies. In turn, these
clearly-defined strategies across our four categories ensure that the Company has a well-balanced and resilient portfolio relevant to meeting our
Purpose and Vision.

CONTENTS
Overview
About us..................................................................................................... 1
Our Performance....................................................................................... 2
Unilever Sustainable Living Plan.............................................................. 3
Financial Performance.............................................................................. 4
Performance Trends.................................................................................. 5
Chairmans Statement.............................................................................. 6
Board of Directors and Management Committee.................................... 7
Our Business Model.................................................................................. 8
Our Brands................................................................................................ 9
Our Operations........................................................................................ 10
Our People............................................................................................... 11
Corporate Information............................................................................. 12
Reports
Notice....................................................................................................... 13
Profile of Directors (seeking appointment / re-appointment)............... 18
Directors Report and Management Discussion and Analysis............... 20
Corporate Governance Report................................................................ 49
Secretarial Audit Report.......................................................................... 65
Financial Statements
Standalone Financial Statements
Economic Value Added........................................................................ 67
Independent Auditors Report............................................................. 69
Balance Sheet...................................................................................... 74
Statement of Profit and Loss.............................................................. 76
Statement of Changes in Equity......................................................... 78
Statement of Cash Flows.................................................................... 79
Notes.................................................................................................... 81
Consolidated Financial Statements
Independent Auditors Report........................................................... 135
Consolidated Balance Sheet............................................................. 138
Statement of Consolidated Profit and Loss..................................... 140
Consolidated Statement of Changes in Equity................................. 142
Consolidated Statement of Cash Flows........................................... 144
Notes.................................................................................................. 146
Form AOC-1....................................................................................... 210
Others
Awards and Recognition.................................................................... 212
Proxy Form

ONLINE
You can find more information about Hindustan Unilever Limited online at www.hul.co.in. For further information on the Unilever Sustainable Living Plan (USLP)
visit www.hul.co.in/sustainable-living

About us
NINE OUT OF TEN INDIAN HOUSEHOLDS USE OUR
PRODUCTS EVERYDAY TO FEEL GOOD, LOOK GOOD AND
GET MORE OUT OF LIFE.
OUR CATEGORIES AND BRANDS
Each of our categories - Home Care, Personal Care, Foods and
Refreshments, includes a portfolio of brands that aim to deliver consistent,
competitive, profitable and responsible growth. Our endeavour is
supported by consistent investment in product innovation and marketing
activities. With over 35 brands spanning 20 distinct categories including
soaps, detergents, shampoos, skin care, toothpastes, deodorants,
cosmetics, tea, coffee, packaged foods, ice cream, frozen desserts and
water purifiers, the Company is a part of the everyday life of millions of
consumers across India. Our portfolio includes leading household brands
such as Lux, Lifebuoy, Surf excel, Rin, Wheel, Fair & Lovely, Ponds,
Vaseline, Lakm, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe,
Brooke Bond, Bru, Knorr, Kissan, Kwality Walls and Pureit.
WHERE WE OPERATE
Hindustan Unilever Limited operates across the length and breadth of
India. We have over 18,000 employees working across our factories and
offices. Conducting our operations with integrity and respect for the many
people, organisations and the environment that our business touches,
has always been at the heart of our corporate responsibility.
` 1,000 CRORE + BRANDS
1. Lux
2. Dove
3. Clinic Plus
4. Ponds
5. Vim
` 2,000 CRORE + BRANDS
1. Surf excel
2. Brooke Bond
3. Wheel
4. Rin
5. Lifebuoy
6. Fair & Lovely
Overview Reports Financial Statements 1
OUR STRATEGIC FOCUS
OUR CATEGORIES HAVE CLEARLY DEFINED STRATEGIES
WITH THE COMMON GOAL OF GROWTH THAT IS CONSISTENT,
COMPETITIVE, PROFITABLE AND RESPONSIBLE.
Further binding the category strategies together are our Compass pillars
which define how Unilever wins with consumers. They are:
Winning with Brands and Innovation
Winning in the Marketplace
Winning through Continuous Improvement
Winning with People
Underpinning the Compass is the USLP which is the foundation of our
business. By delivering social and environmental benefits throughout our
business, we drive our growth, which in turn drives our ability to improve
the lives and opportunities of people, everywhere.
The USLP contributes directly to consistent growth by helping manage
risk, for example, through the supply of sustainably-grown agricultural
raw materials, such as vegetables in our Foods brands. This is especially
important as climate change affects rainfall. It drives growth that is
competitive, by stimulating innovation to create brands that meet the
growing consumer demand for sustainable products. Profitable growth
is achieved by reducing costs through sustainable production methods in
our factories, which reduce waste, use fewer raw materials and consume
less energy. Responsible growth is an outcome of the trust that we earn
by acting ethically and responsibly.
Each of our four category strategies includes specific priorities aimed at
growing sales and delivering improved financial metrics, such as margin
and cash flow.
Our categories face numerous and increasingly complex challenges as
the industry experiences rapid fragmentation and disruption. However,
our Compass pillars provide strategic responses to help drive growth
ahead of the market.
Our success as an organisation depends on our ability to identify and
mitigate the risks generated by our business. In doing so, we take an
embedded approach to risk management, which puts risk and opportunity
assessment at the core of the leadership team agenda, which is where,
we believe, it should be.
Annual Report 2016-17 Hindustan Unilever Limited
2

Our performance
THE BENEFITS THAT OUR VISION AND STRATEGY DELIVERS, TRANSLATE INTO GROWTH ORIENTED PERFORMANCE FOR
SHAREHOLDERS AND SOCIETY AT LARGE

SEGMENT PERFORMANCE
SEGMENTal revenue (%) SEGMENTal PROFITS (%)

Home Care 33 Home Care 21

Personal Care 48 Personal Care 65
Foods 3 Foods 1
Refreshments 14 Refreshments 13
Others 2 Others 0

FINANCIAL

NET REVENUE EBITDA EPS (basic) Cash from Operations

2016-17 2016-17 2016-17 2016-17

` 34,487 ` 6,047
crores crores
` 20.75 ` 6,500+
crores
The Domestic Consumer Earning Before Interest Tax Last year basic EPS: ` 19.12 Cash from operations was up
business grew by 4% with 1% Depreciation and Amortisation per share ` 1079 crores over the previous
underlying volume growth in a (EBITDA) improved by 38 bps year
challenging environment

NON-FINANCIAL
MANUFACTURING
2016 2016 2016

49%
Reduction in CO2 emissions (kg/tonne
of production) in our manufacturing
operations compared to 2008
baseline
53%
Reduction in water consumption (m3/
tonne of production) in our manufacturing
operations compared to 2008 baseline
45%
Reduction in total waste (kg/tonne of
production) generated from factories
compared to 2008 baseline

BETTER LIVELIHOODS SUSTAINABLE SOURCING HEALTH AND WELL-BEING

2016 2016 2016

72,000
Shakti Entrepreneurs empowered
100%
Tomatoes used in Kissan ketchup sourced
>130 million
People reached through our health and
sustainably hygiene programmes

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 3

UNILEVER SUSTAINABLE LIVING PLAN

IMPROVING HEALTH AND WELL-BEING ENHANCING LIVELIHOODS
By 2020, Unilever will help more than a billion people take By 2020, Unilever will enhance the livelihoods of millions of people as it grows its
action to improve their health and well-being. business.

HEALTH AND NUTRITION FAIRNESS IN THE OPPORTUNITIES INCLUSIVE

HYGIENE
TARGET
By 2020, Unilever
will help more than a
billion people globally
to improve their health
and hygiene. This
will help reduce the
incidence of life-
threatening diseases
like diarrhoea.
PERFORMANCE
In India, over 130
million people were
reached by December
2016 through
programmes on
handwashing, safe
drinking water and
sanitation.
TARGET
By 2020, Unilever will
double the proportion
of its portfolio across
the globe, that meets
the highest nutritional
standards, based on
globally recognised
dietary guidelines. This
will help hundreds of
millions of people to
achieve a healthier
diet.
PERFORMANCE
46% of HULs Foods documented in the
and Refreshments
portfolio met the
highest nutritional
standards in 2016,
based on globally
recognised dietary
guidelines.
WORKPLACE
TARGET
By 2020, Unilever
will advance human
rights across global
operations and
extended supply chain.
PERFORMANCE
HUL continued to
embed human rights
with a focus on eight
salient human rights
issues identified by
Unilever which are
2015 Human Rights
Report.
The Total Recordable
Frequency Rate (TRFR)
reduced to 75% in
2016 compared to 2008
baseline for accidents
in HULs factories and
offices.
FOR WOMEN BUSINESS
TARGET TARGET
By 2020, Unilever will By 2020, Unilever will
empower five million have a positive impact
women across the on the lives of 5.5
globe. million people across
the world.
PERFORMANCE
HULs Shakti PERFORMANCE
programme HUL is running 113
empowered 72,000 livelihood and out
Shakti Entrepreneurs reach centres offering
by December 2016. over 20 courses as
part of the Prabhat
initiative around
its manufacturing
locations. As of
December 2016, over
17,000 people have
been successfully
certified and over
12,000 people have
already been linked
to employment
opportunities.

REDUCING ENVIRONMENTAL IMPACT

By 2030, Unilevers goal is to halve the environmental footprint of the making and use of its products as it grows its business.

GREENHOUSE GASES WATER WASTE SUSTAINABLE

TARGET
Halve the greenhouse gas
impact of Unilevers products
across the lifecycle by 2030.
PERFORMANCE
CO2 emissions (kg/tonne of
production) in HULs
manufacturing operations
reduced by 49% compared to
2008 baseline.
TARGET
Halve the water associated
with the consumer use of
Unilevers products by 2020.
PERFORMANCE
Water consumption (in m3/
tonne of production) in HULs
manufacturing operations
reduced by 53% compared to
2008 baseline.
TARGET
Halve the waste associated
with the disposal of Unilevers
products by 2020.
PERFORMANCE
Total waste generated (kg/
tonne of production) from
HULs factories reduced by
45% over 2008 baseline.
SOURCING
TARGET
By 2020, Unilever will source
100% of its agricultural
raw materials for global
operations, sustainably.
PERFORMANCE
In India, a total of 46% of tea
sourced for Unilevers brands
is from sustainable sources.
Nearly 99% of paper and board
used for packing HULs products
is from sustainable sources.

Our USLP commitments and targets are subject to internal verification. For details of the definitions and reporting periods used in the preparation
of these commitments and targets, see our Sustainable Living Section at www.hul.co.in/sustainable-living

Annual Report 2016-17 Hindustan Unilever Limited

4

Financial performance
10 YEAR RECORD
Standalone (` crores)

IGAAP IND AS
Statement of Profit & Loss
Account 2007 2008-09 2009-10 2010-11^ 2011-12^ 2012-13^ 2013-14^ 2014-15^ 2015-16^ 2015-16## 2016-17
(15 months)
Gross Sales* 14,715 21,650 18,220 20,285 22,800 26,680 28,947 32,086 33,856 32,929 33,895
Other Income 432 590 350 627 659 1,211 1,232 1,254 1,063 1,126 1,118
Interest (25) (25) (7) (0) (1) (25) (36) (17) (0) (15) (22)
Profit Before Taxation @ 2,146 3,025 2,707 2,730 3,350 4,349 4,800 5,523 5,910 5,977 6,155
Profit After Taxation @ 1,743 2,501 2,103 2,153 2,599 3,314 3,555 3,843 4,078 4,116 4,247
Earnings Per Share of ` 1 8.73 11.46 10.10 10.58 12.46 17.56 17.88 19.95 18.87 19.12 20.75
Dividend Per Share of ` 1 9.00# 7.50 6.50 6.50 7.50 18.50# 13.00 15.00 16.00 16.00 17.00
*Sales before Excise Duty Charge @ Before Exceptional/Extraordinary items ^Based on Revised Schedule VI/Schedule III #Includes special dividend
##
Figures are restated as per IND AS

IGAAP IND AS
Balance Sheet 2007 2008-09 2009-10 2010-11^ 2011-12^ 2012-13^ 2013-14^ 2014-15^ 2015-16^ 2015-16## 2016-17
(15 months)
Fixed Assets 1,708 2,079 2,436 2,458 2,363 2,509 2,742 2,937 3,300 3,300 4,227
Investments 1,441 332 1,264 1,261 2,438 2,330 3,094 3,278 2,967 2,780 3,779
Net Deferred Tax 213 255 249 210 214 205 162 196 231 168 160
Net Assets (1,834) (183) (1,365) (1,269) (1,502) (2,370) (2,721) (2,686) (2,811) 31 (1,676)
(Current and Non-current)
1,528 2,483 2,584 2,660 3,513 2,674 3,277 3,725 3,687 6,279 6,490
Share Capital 218 218 218 216 216 216 216 216 216 216 216
Reserves & Surplus 1,221 1,843 2,366 2,444 3,297 2,458 3,061 3,509 3,471 6,063 6,274
Loan Funds 89 422 - - - - - - - - -
1,528 2,483 2,584 2,660 3,513 2,674 3,277 3,725 3,687 6,279 6,490
^Based on Revised Schedule VI/ Schedule III Figures are restated as per IND AS
##

IGAAP IND AS
Key Ratios and EVA 2007 2008-09 2009-10 2010-11^ 2011-12^ 2012-13^ 2013-14^ 2014-15^ 2015-16^ 2015-16## 2016-17
(15 months)
EBITDA (% of Gross Sales) 14.1 14.0 15.1 13.2 14.4 15.0 15.5 16.2 16.9 17.5 17.8
Fixed asset Turnover (No. of 8.6 8.3* 7.5 8.3 9.6 10.6 10.6 10.9 10.3 10 .0 8.0
Turnover)
PAT / Gross Sales (%) 11.8 11.6 11.5 10.6 11.4 12.4 12.3 12.0 12.0 12.5 12.5
ROCE (%) 78.0 107.5* 103.8 87.5 96.8 109.1 130.2 127.7 128.4 105.8 105.9
RONW (%) 80.1 103.6* 88.2 74.0 77.7 94.7 104.1 99.5 88.7 72.8 76.6
Economic Value Added 1,314 2,154 1,791 1,750 2,250 2,926 3,147 3,380 3,526 3,438 3,498
(EVA)(` crores)
* Shown on annualised basis ##Figures are restated as per IND AS
Return metrics (ROCE and RONW) are lower in Ind AS compared to IGAAP since under IND AS final dividend including taxes are accounted after approval in AGM only; whereas
in IGAAP such dividends were recognised in the same year to which they relate to. The final final dividend for the financial year 2015-16 was ` 2,474 crores.

2007 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
Others
(15 months)
HUL Share Price on BSE 214 238 239 285 410 466 604 873 870 910
(` Per Share of ` 1)*
Market Capitalisation 46,575 51,770 52,077 61,459 88,600 1,00,793 1,30,551 1,88,849 1,88,154 1,96,902
(` crores)
Contribution to Exchequer (` crores) 3,133 4,429 3,704 3,953 4,839 6,365 6,680 8,309 8,856 9,249
*Based on year-end closing prices quoted in the bse Limited

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 5

Performance Trends
Gross Sales (` crores) Profit After Tax (` crores) EBIT (% of Sales)
35000 4,500
32500 20.0%
30000 4,000
27500 3,500 16.0%
25000
22500 3,000
20000 12.0%
2,500
17500
15000 2,000
8.0%
12500 1,500
10000
1,000 4.0%
7500
5000 500
2500 0.0%
0
0

2007
*2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2015-16
2016-17
2007

*2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

2015-16

2016-17
2007

*2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

2015-16

2016-17

#
#
#

Contribution to Exchequer (` crores) Fixed Assets Turnover (No. of times)

10,000 12.0
9,000
8,000 10.0

7,000
8.0
6,000
5,000 6.0
4,000
3,000 4.0

2,000
2.0
1,000
0 0.0
2007

*2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

2015-16

2016-17
2007
*2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2015-16
2016-17

#
#

Economic Value Added (EVA) Earnings and Dividend Per Share Market Capitalisation and HUL Share
(` crores) (`) Price
3600
22.00 250,000 1000
3200 20.00 900
18.00 200,000 800
2800 16.00 700
2400 14.00 150,000 600
12.00
2000 500
10.0
100,000 400
8.00
1600 300
6.00
1200 4.00 50,000 200
2.00 100
800 0 0 0
^2007

*2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

2015-16

2016-17

2007
*2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17

400

0
2007

*2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

2015-16

2016-17

Market CapitalisaIon (` crores)

Earnings Per Share Dividend Per Share HUL Share Price on BSE (`)*
#

*Figures are for 15 months period ^Includes Special Dividends #

Figures are restated as per IND AS *Based on year-end closing prices quoted in the bse Limited

Annual Report 2016-17 Hindustan Unilever Limited

6

CHAIRMANS STATEMENT
Dear Shareholders, transformation within our organisation and leverage our IT capabilities
to drive competitive advantage. We grew strongly in the fast emerging
It gives me great pleasure to share with you an update on the overall
e-commerce channel even as we adopted sophisticated IT solutions to
performance of your Company in 2016-17. It was yet another difficult
improve our reach and service to millions of small retailers across the
year for the global economy, characterised by low growth and geopolitical
length and breadth of India. Technology is also enabling us to better
uncertainties. In India, rural demand continued to be sluggish in the early
understand our consumers. For instance, our Consumer and Market
part of the year on the back of two consecutive poor monsoons.The overall
Insights group has created a People Data Centre that analyses trends
market showed signs of recovery in the latter half of the year but faced a
from social media, consumer care-lines and digital marketing to turn
temporary slowdown in November due to demonetisation.
millions of conversations into business decisions that optimise sales
In this challenging business environment, Hindustan Unilever Limited and revenue.
(HUL) delivered a resilient performance in 2016-17. This was enabled
Our Sales and Marketing initiatives were ably supported by our world-class
by our 4G model of growth - consistent, competitive, profitable and
Supply Chain. In 2016, we set up a new state-of-the-art manufacturing
responsible growth. We believe that this model, particularly in times of
facility in Doom Dooma, Assam. This project, christened Project Rhino,
uncertainty, is in the best long-term interest of all our stakeholders and a
went from concept to commissioning in just ten months and is an excellent
good indication of a robust strategy.
example of operational excellence and a relentless bias for action.
In the year under review, our Domestic Consumer business grew 4% with
Even as we expand our operations, we remain equally committed to the
1% underlying volume growth. EBITDA margin expanded by 38 bps and
Unilever Sustainable Living Plan (USLP) and driving our environmental
saw an improvement for the sixth consecutive year. Profit after tax before
and social agenda through our brands and corporate actions. Lifebuoy,
exceptional items, PAT (bei), grew by 3% to ` 4247 Crores and Net Profit
Domex and Pureit continued to lead our initiatives in the areas of hygiene,
at ` 4490 Crores was up 9%. The strong track record of cash generation
sanitation and safe drinking water. Through our Swachh Aadat, Swachh
was sustained. The Board of Directors have proposed a final dividend of
Bharat programme, we supported the Indian governments Swachh
` 10 per share, subject to the approval of the shareholders at the Annual
Bharat Abhiyan (Clean India Mission) and promoted good health and
General Meeting. Together with an interim dividend of ` 7 per share, the
hygiene practices in communities across the country. Our efforts in the
total dividend for the financial year ended 31st March, 2017 amounts to
area of health and well-being reached over 130 million people by the end
` 17 per share.
of 2016.
Each of our businesses had an important role to play in delivering these
In line with our USLP goals, we took significant steps to further reduce
strong results. In Home Care, growth was driven by premium Fabric Wash
waste, water consumption and energy usage in our factories and offices.
as Surf excel sustained its volume-led growth momentum and remains
The share of renewable energy used by us increased to 28% through
the biggest brand in the Company portfolio. Vim liquid continued to drive
several innovative initiatives such as converting our agricultural process
market development of the emerging premium household cleaning
waste into consumable fuel. In our Sumerpur unit, we are using solar
segment. The Water portfolio was expanded with the launch of the
energy that meets 80% of power requirement for most of the daylight
Reverse Osmosis (RO) range and was well-received by consumers.
hours. This increase in use of renewable energy and reduction in
The Personal Care business continued to lead trends across all categories energy consumption has helped in reducing the carbon foot-print of our
with a particularly strong performance in Hair Care and Lakm colour manufacturing locations by 13% over the previous year. Equally, initiatives
cosmetics. In addition to driving our core business, we strengthened such as reuse of treated effluent water and rain water utilisation have
our presence in fast-growing segments of the market. We led the helped in lowering water consumption across our factories by 9% over
premiumisation of the Skin Care market with new launches on all our the previous year. In the last five years, per tonne of production, our
skin brands Lakm, Fair & Lovely and Ponds. In the growing naturals energy consumption has reduced by over 30% and water consumption
segment, we launched a new and expanded range of authentic Ayurvedic has reduced by 40%.
Personal Care products under the LEVER Ayush brand name. Similarly,
None of these achievements would have been possible without the
we entered the Baby segment with the launch of Baby Dove.
passion and commitment of our employees - our biggest asset. During
Our Foods business continued its focus on strong market building 2016, we launched a major initiative Connected 4 Growth, which strives
initiatives. To extend our appeal to young adults, Kissan launched a to further empower our people and creates an organisation that is even
new range of khatta meetha jams in Berry, Strawberry and Orange more consumer and customer-centric, faster and more efficient.
flavours. Knorr expanded its international range with the launch of Italian
I am pleased to report that our focus on Human Resources development,
Mushroom soup, Hong Kong Manchow Noodles soup and Shanghai Hot
yet again, ensured that we are chosen as the No. 1 Employer of Choice
& Sour Chicken soup.
by students across premier B-schools in the Nielsen survey. We have
In the Refreshments category, Tea sustained broad-based growth by been ranked in the Top 10 by The Best Companies for Women in India
differentially leveraging its portfolio across the country. Coffee continued (BCWI) Study 2016. These are all recognitions of our ability to attract and
on its premiumisation agenda with BRU, while Ice Creams and Frozen retain the best talent and our commitment to a diverse and inclusive work
Desserts exited the year with robust innovation led growth. culture.

One of the major strengths of your Company is the relentless focus on
execution and productivity and this helped us to sustain brand investments
at competitive levels, while significantly improving margins. Our
Winning in Many Indias (WIMI) organisational initiative has made us
even more agile and responsive to a rapidly evolving marketplace with
intensified competition, channel fragmentation and an increasingly
segmented consumer base.
Technology and mobile connectivity are rapidly changing consumer
behaviour and business processes. We continued to lead the digital
Hindustan Unilever Limited Annual Report 2016-17
I would like to take this opportunity to thank each and every employee as
well as those who work with us across the value chain for their unstinting
support and hard work in the service of our Company. I would also like
to thank you, our shareholders, for your continued trust in the business.
Best Regards,
Harish Manwani
Chairman
 Overview Reports Financial Statements 7

BOARD OF DIRECTORS Management Committee

Mr. Harish Manwani Mr. Sanjiv Mehta

Chairman Managing Director and Chief Executive Officer

Mr. Sanjiv Mehta Mr. P. B. Balaji

Managing Director and Chief Executive Officer Executive Director, Finance & IT and Chief Financial Officer

Mr. P. B. Balaji Mr. Pradeep Banerjee

Executive Director, Finance & IT and Chief Financial Officer Executive Director, Supply Chain

Mr. Pradeep Banerjee Mr. Dev Bajpai

Executive Director, Supply Chain Executive Director, Legal & Corporate Affairs and Company Secretary

Mr. Dev Bajpai Ms. Geetu Verma

Executive Director, Legal & Corporate Affairs and Company Secretary Executive Director, Foods

Mr. Aditya Narayan Mr. B. P. Biddappa

Independent Director Executive Director, Human Resources

Mr. S. Ramadorai Ms. Priya Nair

Independent Director Executive Director, Home Care

Mr. O. P. Bhatt Mr. Sandeep Kohli

Independent Director Executive Director, Personal Care

Dr. Sanjiv Misra Mr. Sudhir Sitapati

Independent Director Executive Director, Refreshments

Ms. Kalpana Morparia Mr. Srinandan Sundaram

Independent Director Executive Director, Sales and Customer Development

Annual Report 2016-17 Hindustan Unilever Limited

8
OUR BUSINESS MODEL
WE BELIEVE THAT SUSTAINABLE AND EQUITABLE GROWTH IS THE ONLY LONG-TERM BUSINESS MODEL. THAT IS WHY
WE HAVE PLACED THE UNILEVER SUSTAINABLE LIVING PLAN AT THE HEART OF OUR BUSINESS MODEL.
Our sustainable business model drives growth that is consistent by
reducing risks, is more competitive through inspiring innovations that
help us grow, is more profitable by reducing costs and is more responsible
leading to enhanced trust in our business.
The three big goals* of the USLP to help more than one billion people
improve their health and well-being by 2020; to halve the environmental
impact of our products across the value chain by 2030; and to enhance the
livelihoods of millions as we grow our business by 2020 are integrated
into our business model. From sustainable sourcing of our agricultural
raw materials to sustainable manufacturing, to marketing brands with
purpose the USLP is our blueprint for achieving our Vision.
We invest in innovation and brands, which create profitable volume
growth. Our scale spreads fixed overheads, improving profitability further,
and this profitable growth allows us to reinvest, generating more free
cash flow which can be further invested in brands and innovation which in
turn drives more profitable volume growth.
CONSUMER INSIGHT
Our business model begins with consumer insight which informs brand
innovation. Accurate insight is critical to understanding how markets
are changing. We forge relationships with consumers through insights
from focus groups, quantitative studies and regular market visits. Digital
research adds one-on-one sophistication while new lines of communication
are opening through direct-to-consumer channels, allowing closer
relationships. Our Consumer and Market Insight (CMI) group helps us
prioritise growth opportunities. Through CMI, we monitor data about
consumption patterns and social media dialogue to inform action, including
sustainability insights, which drive product innovations and behaviour
change programmes.
COLLABORATION
Collaboration is critical to our success. We are open to external ideas
and adept at capturing and integrating their benefits. The USLP involves
working with government and NGOs. Our Supply Chain operates the
Partner to Win programme to encourage innovations from suppliers. This
furthers innovation-led growth and helps us in our USLP commitment
to halve the environmental impact of our products across their lifecycle.
INNOVATION
Our innovations use insights and technologies to deliver brand-led
benefits which meet the latest trends. Our innovation is increasingly
responsive to local needs, landing results faster into the market.
SOURCING
Our procurement teams are responsible for purchasing goods and
services. They are central to driving efficiencies to enhance profitability,
delivering savings, and also implementing our USLP.
MANUFACTURING
HUL operates 30 factories across the country. Your Companys Supply
Chain agenda is centered on five core areas - Customer Service
Excellence, Creating Consumer Delight by dedicated end-to-end Quality
Focus, Creating Value through cost savings programme, Sustainability
and Supplier Partner to Win Programme.
*These are global goals of Unilever
Hindustan Unilever Limited Annual Report 2016-17
LOGISTICS
Our Logistics Team is responsible for moving the goods produced at our
factories and delivering them to our customers. We are now investing in
automation and modernisation of our warehouses. Our centralised Ultra
control tower is now fully operational to manage our logistics operations
which will help in optimisation of cost, improve service, conserve cash
and reduce our carbon footprint. Given the vast distribution and Supply
Chain network, Goods and Services Tax (GST) is likely to unlock huge value
potential and hence, as a first phase, we are fully ready with the logistics
road map to optimise warehousing and inventory carrying cost.
MARKETING
We have been mapping consumers purchase journeys in the digital world,
using data to delve deeper and segment consumers more accurately. This
enables us to deliver more relevant, authentic and effective marketing
content in real-time using the full range of digital communications.
Sustainability is an integral part of our brand strategies. We want all of
our top brands to be Sustainable Living brands, which combine a strong
purpose delivering a social or environmental benefit, with products
contributing to at least one of our USLP goals.
Customer Development
Our Customer Development eco-system encompasses capturing the
demand, fulfillment of demand and generation of demand. As far as demand
capturing is concerned, our focus has been on driving quality of coverage and
increasing the assortment using data centric and analytical approach. With
respect to demand fulfillment, process and technology interventions have
been used for improving service and efficiencies. For demand-generation,
our strategy encompasses winning in traditional trade in both open and
closed formats, winning in route to market as well as winning in emerging
channels like Modern Trade and e-commerce. We work closely with retailers,
online through e-commerce and in stores. Our teams ensure our brands are
always available, properly displayed and in the right recommended price
bracket. We strive to be supplier of choice for customers and trade partners,
through strong joint business planning and in-store execution applying our
Perfect Store programme. We have derived the benefits of tailor-made
consumer and customer plans across categories as part of Winning in Many
Indias agenda due to strengthened connect with customers, consumers and
shoppers. This will continue to be our source of competitive advantage.
DELIVERING VALUE FOR OUR STAKEHOLDERS
Key to our sustainable business model is our stakeholders. To succeed, we
need to engage and work in partnership with them. They include customers
and consumers; investors; suppliers; governments, regulators and
legislators; NGOs and charities; scientific institutions and academia; and
other organisations in the business world, including peer companies and
trade associations. Some of our stakeholders are direct participants in our
value chain and are integral to our ability to deliver consistent, competitive,
profitable and responsible growth. Others influence how we do business
by setting the laws and norms in our country. In turn, we deliver value to
our stakeholders in various forms. Stakeholder engagement is essential in
delivering our Compass strategy and in tackling the issues addressed by
the USLP. We also combine action in our business with external advocacy
and by jointly working with governments, NGOs and others through
transformational change partnerships. By working together, we believe
that fundamental change is possible in the near-term.

Our Brands
OUR BRANDS ARE DRIVEN BY THE PURPOSE OF MAKING SUSTAINABLE LIVING COMMONPLACE.
We constantly innovate to help people look good, feel good and get more
out of life.
Innovating to deliver consumer needs
Through our brands spanning Home Care, Personal Care, Foods and
Refreshments categories, we endeavour to meet evolving consumer
needs and remain relevant in the changing times.
In the fast growing space of the liquid detergents market, we introduced
Surf excel Matic liquid. The launch was well-received by consumers.
This year, to extend our appeal to young adults, Kissan launched a new
range of khatta meetha jams in Berry, Strawberry and Orange flavours.
Knorr launched three new flavoursItalian Mushroom, Hong Kong
Manchow Noodles and Shanghai Hot & Sour Chicken in the international
range of soups.
In 2016, Pureit expanded its play in the growing branded Reverse Osmosis
(RO) segment through its value offering of Classic RO range of water
purifiers. This has democratised the segment by providing consumers a
quality range of RO water purifiers at an affordable price. This was met
with resounding success in the market.
Leading trends to win in the future
The Personal Care business continued to lead trends across all categories.
In Hair Care, we strengthened our portfolio by acquiring Indulekha, a
premium brand with strong credentials around ayurveda. The brand has
strong equity among consumers and gives us an opportunity to leverage
its natural and therapeutic positioning.
We also strengthened Dove, Tresemm, Sunsilk and Clinic Plus with
new variants. We led the premiumisation of the Skin Care market with
activation and launches on all our skin brands Fair & Lovely, Ponds
and Lakm. Lakm continued to innovate with a series of new products
including the Illuminate and Weightless range of colour cosmetics.
We launched a new and expanded range of authentic Ayurvedic Personal
Care products under the Lever Ayush brand name. Co-created with Arya
Vaidya Pharmacy, the worlds leading ayurveda institute, the new range
of Lever Ayush brings 5000 years of ayurvedic wisdom to solve modern
lifestyle problems. The products are designed and manufactured with high
quality, authentic ayurveda-based offerings, and are based on formulations
prescribed in ayurvedic granthas.
We entered the Baby segment with the launch of Baby Dove. Developed
for babies with normal to dry skin, the range includes the Baby Dove Rich
Moisture Baby Bar, Baby Lotion, Diaper Rash Cream, Baby Wipes and a
Sensitive Moisture Baby Bar to take special care of babies with sensitive skin.
Adding magic to marketing
Knorr reached out to 12 million consumers through the World on a Plate
contest. During the event, world-renowned Chef Gary of Masterchef
Australia fame, conducted a masterclass on cooking using Knorr Chef
Masalas.
We continued to leverage our Foods and our Refreshments portfolios
through HULs Adda, a unique touchpoint created at corporate houses.
Through our 100+ Adda properties, we now serve more than 60,000
people a day.
Sunlight carried out a brand campaign in West Bengal - Sunlight Banglar
Guner Rang - a search and mentorship programme in the realm of
performing arts. With Anand Bazaar Patrika as a strategic partner,
Overview Reports Financial Statements 9
Sunlight delivered this message to millions of people in Bengal. The
campaign received close to 2400 entries on Sunlights website.
Lipton Green Tea continued to champion the cause of a healthier India by
encouraging people to adopt a healthier lifestyle and dietary habits. The
brand collaborated with Hindustan Times to support the No TV Day to
promote an active lifestyle.
Doing well by doing good
Our brands continued to drive our purpose of making sustainable living
commonplace. Kissan ketchup continued to source 100% of its tomatoes
through sustainable sources, thereby enhancing livelihoods of local
farmers. Kissan Jam too has been loved by children because of its 100%
real fruits and perfect amalgamation of eight fruits.
The Rin Career Ready Academy (RCRA) was launched in 2015 with an aim
to inspire, educate and equip youth from modest backgrounds with skills
in English speaking, office dressing and interview training. In 2016, RCRA
was re-launched with the choice of medium between voice (on mobile)
and website with the introduction of an online course. So far, over three
and a half lakh people have benefitted through this programme.
The 3-Roses team kicked off Brooke Bond Kudumbam programme to
strengthen our relationship with the tea- masters of the Hot Tea Shops
(HTS) in Tamil Nadu. Under this programme, we provided benefits such
as childrens scholarship, health check-ups, and insurance to the tea-
masters. This enabled us to enroll an additional 4000 HTS outlets across
15 cities in Tamil Nadu.
Through the Domex Toilet Academy, over one lakh toilets have been built.
The number of people benefitted through this programme is estimated
to be over six lakh. Through the handwashing programmes, Lifebuoy
touched the lives of over 63 million people till date.
Dove helped young girls be confident with the way they look and enjoy
a fulfilling future. Through trained moderators, we carried out sessions
across schools in Delhi, Mumbai, Kolkata and Hyderabad touching nearly
8000 young lives.
The Fair & Lovely Foundation that aims to economically help women
become self-reliant and pursue their dreams through a scholarship
programme, in 2017, launched an online platform to maximise its reach.
This platform was hugely successful and we received over 100,000 visits
within one month.
Creating a winning experience
Brooke Bond Red Label collaborated with Yash Raj Films to present Indias
first transgender band The Brooke Bond Red label 6-pack band in their
quest to foster togetherness. This purpose-driven marketing initiative
was recognised with various national and international awards including
the prestigious Grand Prix - Glass Lions at the Cannes Lions Festival.
Taj Mahal tea continued to provide a platform for Indian classical music
and celebrated its 50th anniversary with a 14-hour long live concert at the
Taj Tea House. The event was broadcast on our YouTube channel Darbar-
E-Taj garnering over two million views.
Surf excel extended its Dirt is Good brand philosophy through an
activation that helped mothers inculcate the value of sharing in their
kids in order to get them ready for life. The brand partnered with various
foundations such as HelpAge India, Smile and others to facilitate the
sharing of clothes, crafts, birthdays and a lot more with underprivileged
children and elderly people.
Annual Report 2016-17 Hindustan Unilever Limited
10
Our Operations
THE TRANSFORMATION OF OUR SUPPLY CHAIN AND GO-TO-MARKET STRATEGY WILL ENABLE US TO WIN DECISIVELY
IN THE MARKETPLACE.
We are reaching more consumers than ever before and building an
effective ecosystem of like-minded partnerships throughout our value
chain. This will help us achieve our 4G growth objectives as well as drive
strong operational performance.
FULFILLING CONSUMER NEEDS
The service delivery standards improved steadily with Customer-Case
Fill-On-Time upwards of 95%. This was achieved by developing a
segmented approach and having a clear roadmap developed for Category,
Geography and Channels. We continued to focus on last-mile delivery
improvement programme.
Your Company continued to strengthen the processes of Sales and Operation
Planning in order to shorten planning cycles and be responsive to market
demands. This capability helped to align goals across Finance, Customer
Development, Marketing, Research and Development and Supply Chain.
Innovation Process Management is key for first-time-right launch of the
products in the marketplace. This is the stage gate process which helps
in identifying risk and mitigate it at every process step.
DELIGHTING CONSUMERS THROUGH END-TO-END
QUALITY FOCUS
We continued to focus on reducing consumer complaints and
improving on-shelf consumer-relevant quality standards. Delighting
consumers everyday is core to how we drive quality in our
products and this year, we have been able to substantially improve
on-shelf quality by 37% over 2015.
Your Company has seen significant increase in the number of innovations
while improved on-time-in-full delivery. The focus on bigger and faster
innovations has significantly helped your Company launch innovations
first time right. The Partner to Win Program, developed by Unilever
globally, aims at developing Joint Business Plans with suppliers and
business partners. It has resulted in reduced lead time and costs,
improved reliability and new innovation delivery.
BRINGING CONSUMERS CLOSER
TheWinning in Many Indias agenda has now started reaping benefits
and your Company moved the needle sharply on quality of servicing
and in-market execution by getting closer to customers, shoppers
and consumers. Our Supply Chains capability to offer cluster-specific
promotion and formulation is helping the Company get closer to a diverse
set of consumers and address their needs and aspirations.
DRIVING SUSTAINABILITY ACROSS THE VALUE CHAIN
Your Company has increased its renewable energy share to 28% in line
with the USLP commitments. This was achieved by converting agricultural
process waste from our operations into fuel besides increasing utilisation
of traditional biofuels like agri-waste. Factory teams worked to reduce
specific energy consumption by eliminating idle operation of equipment,
optimising drives and installation of digital controllers.
This increase in renewable energy usage and reduction in specific energy
consumption contributed to reduction in your Companys CO2 emission
by 13% over the previous year. All factories and warehouses continue
to maintain zero non-hazardous waste to landfill site status. Waste
segregation and pre-processing facilities have been provided at all
locations to improve recyclability and reduce total waste quantities.
Year-on-year reduction of water usage continues to be a key priority for
your Company. Increase in harvested rain water utilisation in processes,
Hindustan Unilever Limited Annual Report 2016-17
reuse of treated effluent water, reduction of water losses from boiler and
cooling tower blowdown, and process water requirement optimisations
have all contributed to reduction of fresh water abstraction and lowering
of water consumption across factories by nine percent over the previous year.
GETTING FUTURE READY
Your Company continued on its journey of implementing its long-term
manufacturing strategy, with efficient capacity creation and by introducing
new technologies to support volume growth.
World Class Manufacturing principles along with Industrial Performance
Guidelines, which focus on root-cause analysis and elimination of
non-value adding activities, helped lead improvement in efficiencies and
cost-performance. Factories started delivering >10% cost savings on
perimeter by eliminating non-value added activities.
New capabilities like industrial performance are merged into Unilever
Production System (UPS). All these capabilities are now driven centrally
under the UPS umbrella, which has increased responsiveness.
Information Technology (IT) continues to support business operations
and drive competitive advantage for your Company. Your Company has
invested in transitioning the common distribution management system
into technologies of the future to deliver innovations that underpin the
business strategy. The common mobility solution is also being moved to
News Page, one of the market leaders in sales force mobility solutions.
This would enable a sharper and richer sales execution process in
the marketplace. IT has continued to play a leading role in delivering
capabilities that fuel the growth of the e-commerce business. Solutions
to manage digital content of our products and brands, and to seamlessly
publish the same to our partners have helped improve the quality of
consumer engagement online. IT has also developed analytical solutions
for improved understanding of consumer sentiments and for engaging
with them in an agile manner.
Your Company invested in rewiring processes and tools to transform
into an amazingly simple organisation. Investments in new technologies
have helped move the needle on customer service. Your Company has
continued the active engagement with the external environment and is
investing to enhance solutions across the value chain to prepare itself for
the Goods and Services Tax (GST) era.
DRIVING UP SAVINGS
Your Company continued its focus on driving volume growth and operating
profit with effective cost-saving programmes along with judicious pricing,
without compromising on the competitiveness of brand investments,
which helped in delivering another year of profitable growth. With a robust
funnel of saving programmes, your Company continued on its path of
delivering consistent end-to-end cost savings. Cash delivery was achieved
with the help of scientific IT tools, resulting in substantial amount of cash
for the business.
Project Livewire that was implemented for end-to-end business analytics,
continues to enable your Company to drive business performance
management with speed and agility. During the year, an extensive
business review was taken under multiple cost lines using principles of
Zero Based Budgeting (ZBB). Various plans have been identified to save
costs and improve operating margins.
To drive speed, expertise, standardisation and scale in accounting processes,
three accounting centers are being formed covering, Sales Accounting,
Corporate Centre Accounting and Factory Accounting. These will become
expertise centres with cutting-edge analytics and technology capabilities and
help us de-link business growth from transactional volume growth.

OUR PEOPLE
Great Brands and Great People are our biggest assets. Sustainable,
profitable growth can only be achieved in an organisation that focusses on
performance-culture and where employees are engaged and empowered
to be the best they can be.
Success in the future will depend on being lean, agile and competitive in
a resource-challenged world. We are working towards creating a simpler,
diverse and agile organisation that will help us move faster, innovate
better and leverage our global scale.
Employer of Choice attracting the right
talent
HUL has retained the No. 1 Employer of Choice title among students
on campus in the Nielsen survey. Your Company continues to be the
Dream Employer and also the top Company considered for application
by B-School students.
HUL has been recognised as one of the Top 10 Best Companies for
Women in India by The Best Companies for Women in India (BCWI) Study
2016. This award is a recognition of our commitment towards creating a
diverse and inclusive work culture.
Building the Employer brand digitally
The Facebook Unilever Diaries page has over 500,000 fans and helps
us deepen our engagement with the student community. It has helped in
strengthening our brand image among students.
The Facebook Unilever Careers page has a reach of over 800,000
engaged users. This has enhanced engagement and ensures top of mind
employer brand recall.
Creating an agile and inclusive work
culture
Apart from enabling infrastructure and work practices like maternity and
paternity support programmes, and flexible work arrangements towards
creating an inclusive culture, we constantly evaluate various employee
support requirements to remain a progressive employer.
The senior leadership continues to play an important role in our journey
of building an agile and inclusive organisation.
Employee Well-being
Employee well-being is of utmost importance. We focus on the four
aspects of well-beingPhysical, Mental, Emotional and Purposeful.
Several initiatives have been taken over the last year to communicate
the importance of and provide support systems to enhance employee
well-being. An Employee Assistance Program called Reach Out - a
telephonic counselling programme was launched in 2016, which has
anytime anywhere access.
Nurturing Talent and Building Leaders
Driven by the Leaders Build Leaders philosophy, we have developed an
environment where people get big responsibilities early in their careers
and are able to constantly groom their leadership style and ability. Our
flagship management trainee programme, the Unilever Future Leaders
Programme (UFLP) has been the training ground for many inspiring
leaders across HUL and Unilever, and provides extensive cross-functional
experience through live-projects and assignments.
Overview Reports Financial Statements 11
The UFLP is designed to do just what its name suggests - develop future
leaders. Its aim is to ensure that the Company has a future-ready talent
pipeline for leadership roles by the end of a year-long accelerated training
programme. This readiness is not only in terms of business skills but also
in terms of leadership skills and maturity. It also provides a foundation in
the core values of our business.
Developing a Learning Culture
HUL is known as the Leadership Factory, exporting talent to Unilever
and to the industry at large. The foundation of all our learning practices is
based on a 70-20-10 approach.
70% of learning is done through on-the-job training, unique job experiences,
challenging assignments and building business-linked capabilities in
order to achieve our ambitious business targets. 20% of learning is through
coaching and mentorship, which helps transform talented individuals
into great leaders. 10% of learning is through formal development
programmes. Our learning curriculum is designed to support the entire
life cycle of our employees careers.
Ensuring Safety
Our mission is to protect and enhance the well-being of our employees,
visitors and partners. Safe working is a non-negotiable.
We follow Unilever global safety standards in all our units. Our safety practices
ensure all possible safety hazards are identified and eliminated; not only at the
workplace but also during travel. We promote Beyond Work Safety as part of
our holistic safety culture to improve safety of employees beyond work.
Prabhat Empowering Communities
Indias growth must be propelled from the grassroots levels and Project
Prabhat, our USLP linked programme, is an initiative that builds on the
local developmental needs to fulfil that dream. Through Prabhat, we
engage with and contribute to the development of local communities
under the pillars of Water Conservation, Enabling Livelihoods and Health
& Hygiene.
From its launch in December 2013 in eight locations, Project Prabhat
is now live in over 30 locations and has directly impacted over six and
a half lakh people. The success of Prabhat can be attributed to strong
relationships that we have been able to build with local communities.
Under the health & hygiene initiative our factory workers also known as
Swachhta Doots become agents of behaviour change in their villages
promoting three simple good habits washing hands five times a day,
using a toilet for defecation and adopting safe drinking water practices.
Your Company has successfully reached over 30 lakh people since
inception through this programme.
Organising for Growth
In the beginning of the year, Unilever launched the Connected 4 Growth
(C4G) framework which entailed setting up of empowered Cluster
Category Business Teams (CCBTs) with representatives from different
functions. During the year, the C4G framework has been embedded
well in the business through 15 fully functional CCBTs. Your Company is
confident that this framework will help to bring more speed and agility
in its operations to compete in the marketplace and strengthen the
consumer connect.
Annual Report 2016-17 Hindustan Unilever Limited
12 Corporate Information

Corporate Information
REGISTERED OFFICE AUDITORS
Unilever House, B. D. Sawant Marg, BSR & Co. LLP, Mumbai
Chakala, Andheri (East), Firms Registration No.: 101248W/W-100022
Mumbai 400 099.
BANKERS
Bank of America Hongkong & Shanghai Banking Standard Chartered Bank
Bank of Baroda Corporation State Bank of Hyderabad
Bank of India ICICI Bank State Bank of India
Citibank N.A. Indian Bank Syndicate Bank
Deutsch Bank Punjab National Bank Union Bank of India
HDFC Bank

PLANT LOCATIONS
NORTHERN REGION WESTERN REGION

BAROTIWALA
Khasra No. 94-96, 355-409, Village Balyana, Barotiwala IA,
Tehsil Baddi, District Solan - 174 103, Himachal Pradesh
Khasra No. 1350 1318, Bhatoli Kalan, Hill Top Industrial CHIPLUN
Area, Jharmajri, Tehsil Baddi, District Solan - 173 205,
Himachal Pradesh
ETAH
Village Asrauli, G.T.Road, Etah-207 001, Uttar Pradesh
HARIDWAR
Plot No. 1, Sector 1A, Integrated Industrial Estate, Ranipur,
Haridwar - 249 403, Uttarakhand
NALAGARH
Hudbust No. 143, Khasra No. 182 / 183 / 187/1, Village
Kirpalpur, Near Nalagarh Fire Station, Tehsil - Nalagarh,
District Solan - 174 101, Himachal Pradesh
CHHINDWARA
V 5/6 KM Stone, Narsinghpur Road, Lehgadua,
Post Khajari, Chhindwara 480 002, Madhya Pradesh
B-7/17, Lote Parshuram MIDC, Khed Taluka,
District Ratnagiri, Chiplun 415 722, Maharashtra
GOA
Plot Nos. 128 - 139 & 324 - 326, Kundaim Industrial Estate,
Kundaim 403 115, Goa
KHAMGAON
C-9, MIDC, Khamgaon, District Buldhana 444 303, Maharashtra
MUMBAI
Aarey Milk Colony, Goregaon, Mumbai 400 065, Maharashtra
NASIK

ORAI Plot No. A-8/9, MIDC, Malegaon, Sinnar - 422 103,

Nasik, Maharashtra
A-1,UPSIDC Industrial Area, Orai, District Jalaun - 285 001
Uttar Pradesh SILVASSA

RAJPURA Survey No.151/1/1, Village Dapada, Khanvel Road,

Silvassa - 396 230, Dadra and Nagar Haveli
A-5, Phase ll-B, Focal Point, Rajpura - 140 401, Punjab
Survey No.907, Kilwali Road, Amli Village, Near Gandhigram
SUMERPUR Bus Stop, Silvassa - 396 230, Dadra and Nagar Haveli
A-1,UPSIDC Industrial Area, Bharua, Sumerpur,
Hamirpur - 210 502, Uttar Pradesh

SOUTHERN REGION EASTERN REGION

COCHIN HALDIA
Ernakulam North PO, Tatapuram, Cochin - 682 018, Kerala PO Durgachak, Haldia, District Purba Medinapur - 721 602,
HOSUR West Bengal
Plot No.50 & 51, SIPCOT Industrial Complex, KOLKATA
Hosur - 635 126, Tamil Nadu 1, Transport Depot Road, Kidderpore, Kolkata - 700 088, West Bengal
MANGALORE 63, Garden Reach, Kolkata - 700 024, West Bengal
Sultan Battery Road, Boloor, Mangalore 575 003, Karnataka P10 Taratola Road, Kolkata - 700 088, West Bengal
MYSORE TINSUKIA
Plot No. 424, Hebbal Industrial Area, Mysore 570 016, Karnataka Dag No. 21 of 122 FS Grants, Mouza - Tingrai, Off NH No. 37,
PONDICHERRY Doom Dooma Industrial Estate, District Tinsukia - 786 151, Assam
Off NH 45A, Vadamangalam, Pondicherry - 605 102 Unit 4, Dag No. 8-10, 12, 13, 23, 24, 44, 45 & 47 of 122 FS Grants,
No. 9 (3), Cuddalore Road, Kirumambakkam, Mouza - Tingrai, Doom Dooma Industrial Estate,
Pondicherry 605 702. District Tinsukia - 786 151, Assam

Hindustan Unilever Limited Annual Report 2016-17


Registered Office: Unilever House, B. D. Sawant Marg, Chakala, Andheri (East), Mumbai - 400 099
CIN: L15140MH1933PLC002030, Web: www.hul.co.in, E-mail: levercare.shareholder@unilever.com, Tel: +91 22 39832285 / 39832452
Notice
of the Annual General Meeting
Notice is hereby given that the 84th Annual General Meeting of
Hindustan Unilever Limited will be held on Friday, 30th June, 2017
at 3.30 p.m. at the Registered Office of the Company at Unilever House,
B. D. Sawant Marg, Chakala, Andheri (East), Mumbai - 400099, to transact
the following business:
ORDINARY BUSINESS
1. To receive, consider and adopt the audited financial statements
(including audited consolidated financial statements) for the financial
year ended 31st March, 2017 and the Reports of the Directors and
Auditors thereon.
2. To confirm the payment of Interim Dividend and to declare Final
Dividend on equity shares for the financial year ended 31st March, 2017.
3. To appoint a Director in place of Mr. Harish Manwani (DIN 00045160),
who retires by rotation and being eligible, offers himself for
re-appointment.
4. To appoint a Director in place of Mr. Pradeep Banerjee
(DIN 02985965), who retires by rotation and being eligible, offers
himself for re-appointment.
5. To appoint a Director in place of Mr. P. B. Balaji (DIN 02762983),
who retires by rotation and being eligible, offers himself for
re-appointment.
6. To ratify appointment of M/s. BSR & Co. LLP as Statutory Auditors:
RESOLVED THAT pursuant to the provisions of Sections 139, 142 and
other applicable provisions, if any, of the Companies Act, 2013 (the Act)
and the Rules made thereunder, (including any statutory modification(s)
or re-enactment thereof for the time being in force) and pursuant
to the resolution passed by Members at the Eighty First Annual
General Meeting appointing M/s. BSR & Co. LLP, Chartered Accountants,
Mumbai (Firm Registration No. 101248W/W-100022) as Statutory Auditors
of the Company to hold office until the conclusion of Eighty Sixth Annual
General Meeting of the Company, the Company hereby ratifies and
confirms the appointment of M/s. BSR & Co. LLP, as Statutory Auditors
of the Company for the financial year ending 31st March, 2018 on such
remuneration as recommended by the Audit Committee and as may be
mutually agreed between the Board of Directors of the Company and the
Statutory Auditors.
SPECIAL BUSINESS
7. To consider and, if thought fit, to pass the following resolution as a
Special Resolution:
RESOLVED THAT in supersession of the resolution passed by
the Members at the Annual General Meeting held on 4th April,
2008 as amended by the resolution passed at the Annual General
Meeting held on 23rd July, 2012 and pursuant to the provisions of
Overview Reports Financial Statements 13
Sections 197, 198 and other applicable provisions, if any, of the
Companies Act, 2013 (the Act) and Rules made thereunder (including
any statutory modification(s) or re-enactment thereof for the time
being in force) read with Schedule V of the Act and Article 173 of
the Articles of Association of the Company and subject to such
approval(s) of Central Government or any statutory authorities as
may be required, the Company be and is hereby authorised to pay
to its managerial personnel (including Managing Director(s) and
Whole-time Director(s)), such sum by way of remuneration
comprising of salary, performance linked bonus, commission, perquisites
and allowances as may be determined by the Board of Directors of the
Company or a duly constituted Committee thereof including but not limited
to Nomination and Remuneration Committee, within the maximum
limits as mentioned in the Explanatory Statement annexed to the
Notice convening this Annual General Meeting and computed in the
manner provided under Section 198 of the Act.
RESOLVED FURTHER THAT the Board of Directors or a duly
constituted Committee thereof be and is hereby authorised to take all
such steps as may be necessary, proper or expedient to give effect to
this resolution.
8. To consider and, if thought fit, to pass the following resolution as an
Ordinary Resolution:
RESOLVED THAT in accordance with the provisions of Section 152
and all other applicable provisions, if any, of the Companies Act,
2013 (the Act) and the Rules made thereunder (including any
statutory modification(s) or re-enactment thereof for the time being
in force), Mr. Dev Bajpai (DIN : 00050516), who was appointed as an
Additional Director of the Company with effect from 23rd January, 2017
pursuant to Section 161 of the Act and Article 145 of the Articles of
Association of the Company and who holds ofce upto the date of this
Annual General Meeting, be and is hereby appointed as a Director of
the Company, liable to retire by rotation.
RESOLVED FURTHER THAT in accordance with the provisions of Sections
196, 197 and 198 read with Schedule V and all other applicable provisions,
if any, of the Act and the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 (including any statutory modication(s)
or re-enactment thereof, for the time being in force) and subject to such
sanctions, as may be necessary, approval of the members of the Company
be and is hereby accorded for the appointment of Mr. Dev Bajpai as a
Whole-time Director of the Company, for a period of 5 (five) years with
effect from 23rd January, 2017, liable to retire by rotation, on such terms
and conditions including remuneration as set out in the Explanatory
Statement annexed to the Notice convening this Annual General Meeting.
RESOLVED FURTHER THAT the Board of Directors or a duly constituted
Committee thereof be and is hereby authorised to take all such steps as
may be necessary, proper or expedient to give effect to this resolution.
Annual Report 2016-17 Hindustan Unilever Limited
14 Notice
9. To consider and, if thought fit, to pass the following resolution as an
Ordinary Resolution:
RESOLVED THAT pursuant to the provisions of Section 148(3)
and other applicable provisions, if any, of the Companies Act, 2013
and the Rules made thereunder (including any statutory
modification(s) or re-enactment thereof for the time being in
force), the remuneration payable to M/s. RA & Co., Cost Accountants
(Firm Registration No. 000242), appointed by the Board of Directors
as Cost Auditors to conduct the audit of the cost records of the
Company for the financial year ending 31st March, 2018, amounting to
` 11 lakhs (Rupees Eleven Lakhs only) as also the payment of service
tax as applicable and reimbursement of out of pocket expenses
incurred in connection with the aforesaid audit, be and is hereby
ratified and confirmed.
NOTES :
1. An Explanatory Statement pursuant to Section 102 of the
Companies Act, 2013 relating to the Special Business to be transacted
at the Annual General Meeting (AGM) is annexed hereto.
2. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO
APPOINT A PROXY TO ATTEND AND VOTE ON POLL ON HIS / HER
BEHALF AND THE PROXY NEED NOT BE A MEMBER OF THE
COMPANY. Pursuant to Section 105 of the Companies Act, 2013, a
person can act as a Proxy on behalf of not more than fifty members
holding in aggregate not more than ten percent of the total share
capital of the Company carrying voting rights. Members holding more
than ten percent of the total share capital of the Company carrying
voting rights may appoint a single person as Proxy, who shall not act
as a Proxy for any other Member. If a Proxy is appointed for more
than fifty Members, the Proxy shall choose any fifty Members and
confirm the same to the Company not later than 48 hours before
the commencement of the meeting. In case, the Proxy fails to do so,
the first fifty proxies received by the Company shall be considered
as valid. The instrument of Proxy, in order to be effective, should
be deposited, either in person or through post, at the Registered
Office of the Company, duly completed and signed, not later than
48 hours before the commencement of the meeting. A Proxy Form
is annexed to this Report. Proxies submitted on behalf of limited
companies, societies, etc., must be supported by an appropriate
resolution / authority, as applicable.
3. Corporate Members intending to send their authorised representatives
to attend the Annual General Meeting, pursuant to Section 113 of
the Companies Act, 2013, are requested to send to the Company, a
certified copy of relevant Board Resolution together with the respective
specimen signatures of those representative(s) authorised under the
said resolution to attend and vote on their behalf at the meeting.
4. The Register of Members and Share Transfer Books of the Company
will remain closed from Saturday, 24th June, 2017 to Friday,
30th June, 2017 (both days inclusive).
5. The Final Dividend for the financial year ended 31st March, 2017,
as recommended by the Board, if approved at the Annual General
Meeting, will be paid on or after Wednesday, 5th July, 2017 to those
Members whose name appears in the Register of Members of the
Company as on the book closure dates.
6. Members holding shares in demat form are hereby informed
that bank particulars registered with their respective Depository
Participants, with whom they maintain their demat accounts, will
be used by the Company for the payment of dividend. The Company
Hindustan Unilever Limited Annual Report 2016-17
or its Registrar cannot act on any request received directly from
the Members holding shares in demat form for any change of bank
particulars. Such changes are to be intimated only to the Depository
Participants of the Members. Members holding shares in demat form
are requested to intimate any change in their address and / or bank
mandate immediately to their Depository Participants.
7. Members holding shares in physical form are requested to intimate
any change of address and / or bank mandate to Karvy Computershare
Private Limited / Investor Service Department of the Company
immediately.
8. Details as required in Regulation 36(3) of the Listing Regulations
in respect of the Directors seeking appointment / re-appointment
at the Annual General Meeting are provided at page nos. 18 and 19
of the Annual Report. Requisite declarations have been received
from the Directors seeking appointment / re-appointment.
Mr. Sanjiv Mehta, Managing Director and CEO and the Independent
Directors of the Company have been appointed for a term of 5 years in
accordance with the relevant provisions of the Companies Act, 2013,
and are not eligible to retire by rotation.
9. Pursuant to Section 101 and Section 136 of the Companies Act, 2013 read
with relevant Rules made thereunder, companies can serve Annual Reports
and other communications through electronic mode to those Members
who have registered their e-mail address either with the Company or
with the Depository Participant(s). Members who have not registered
their e-mail address with the Company can now register the same by
submitting a duly filled-in E-communication Registration Form available
on the website of the Company www.hul.co.in to Karvy Computershare
Private Limited or Investor Service Department of the Company. Members
holding shares in demat form are requested to register their e-mail
address with their Depository Participant(s) only. Members of the Company
who have registered their e-mail address are also entitled to receive such
communication in physical form, upon request.
10. The Notice of AGM, Annual Report and Attendance Slip are being sent in
electronic mode to Members whose e-mail address is registered with
the Company or the Depository Participant(s), unless the Members
have registered their request for the hard copy of the same. Physical
copy of the Notice of AGM, Annual Report and Attendance Slip are
being sent to those Members who have not registered their e-mail
address with the Company or Depository Participant(s). Members who
have received the Notice of AGM, Annual Report and Attendance Slip in
electronic mode are requested to print the Attendance Slip and submit
a duly filled in Attendance Slip at the Registration Counter at the AGM.
11. Pursuant to Section 108 of the Companies Act, 2013, Rule 20 of
the Companies (Management and Administration) Rules, 2014, as
amended and Regulation 44 of Listing Regulations, the Company is
pleased to provide the facility to Members to exercise their right to
vote on the resolutions proposed to be passed at AGM by electronic
means. The Members, whose names appear in the Register of
Members / list of Beneficial Owners as on Friday, 23rd June,
2017, i.e. the date prior to the commencement of book closure,
being the cut-off date, are entitled to vote on the Resolutions set
forth in this Notice. Members may cast their votes on electronic
voting system from any place other than the venue of the meeting
(remote e-voting). The remote e-voting period will commence at
9 a.m. on Monday, 26th June, 2017 and will end at 5 p.m. on Thursday,
29th June, 2017. In addition, the facility for voting through electronic
voting system shall also be made available at the AGM and the Members
attending the AGM who have not cast their vote by remote e-voting
shall be eligible to vote at the AGM. The Company has appointed

Mr. S. N. Ananthasubramanian, Practising Company Secretary, to
act as the Scrutinizer, to scrutinize the entire e-voting process in
a fair and transparent manner. The Members desiring to vote
through remote e-voting are requested to refer to the detailed
procedure given hereinafter.
PROCEDURE FOR REMOTE E-VOTING
I. The Company has entered into an arrangement with
Karvy Computershare Private Limited for facilitating remote e-voting
for AGM. The instructions for remote e-voting are as under:
(a) In case of Members receiving an e-mail from
Karvy Computershare Private Limited:
(i)
Launch an internet browser and open
https://evoting.karvy.com/
(ii) Enter the login credentials i.e. User ID and password,
provided in the e-mail received from Karvy Computershare
Private Limited. However, if you are already registered
with Karvy for e-voting, you can use your existing User ID
and password for casting your vote.
(iii) After entering the above details, click on - Login.
(iv) Password change menu will appear. Change the
Password with a new Password of your choice. The
new password shall comprise minimum 8 characters
with at least one upper case (A-Z),one lower case (a-z),
one numeric (0-9) and a special character (@,#,$,etc.)
The system will also prompt you to update your contact
details like mobile number, e-mail ID, etc. on first login.
You may also enter a secret question and answer of
your choice to retrieve your password in case you forget
it. It is strongly recommended that you do not share
your password with any other person and that you take
utmost care to keep your password confidential. After
changing the password, you need to login again with the
new credentials.
(v) On successful login, the system will prompt you to select
the E-Voting Event.
(vi) Select EVENT of Hindustan Unilever Limited - AGM and
click on - Submit.
(vii) Now you are ready for e-voting as Ballot Form page
opens.
(viii) Cast your vote by selecting appropriate option and click
onSubmit. Click on OK when prompted.
(ix) Upon confirmation, the message Vote cast successfully
will be displayed.
(x) Once you have confirmed your vote on the resolution, you
cannot modify your vote.
(xi) Institutional shareholders (i.e. other than individuals,
HUF, NRI, etc.) are required to send scanned copy (PDF/
JPG Format) of the relevant Board Resolution / Authority
Letter, along with attested specimen signature of the duly
authorised signatory(ies) who are authorised to vote, to
the Scrutinizer by an e-mail at scrutinizer@snaco.net.
They may also upload the same in the e-voting module
in their login. The scanned image of the above mentioned
documents should be in the naming format Corporate
Name EVENT NO.
Overview Reports Financial Statements 15
(b) In case of Members receiving physical copy of the Notice of
AGM and Attendance Slip
(i) Initial Password is provided at the bottom of the
Attendance Slip in the following format:
USER ID PASSWORD
- -
(ii) Please follow all steps from Sr. No. (a)(i) to Sr. No. (a)(xi)
mentioned above, to cast vote.
II. In case of any queries, you may refer to the Frequently Asked
Questions (FAQs) and e-voting user manual available in the
downloads section of the e-voting website of Karvy Computershare
Private Limited https://evoting.karvy.com/.
III. The voting rights shall be as per the number of equity shares
held by the Member(s) as on Friday, 23rd June, 2017, being the
cut-off date. Members are eligible to cast vote electronically only
if they are holding shares as on that date.
IV. Members who have acquired shares after the dispatch of the
Annual Report and before the book closure may obtain the user
ID and Password by sending a request at evoting@karvy.com or
levercare.shareholder@unilever.com.
However, if you are already registered with Karvy Computershare
Private Limited for remote e-voting, then you can use your
existing user ID and password for casting your vote.
If you have forgotten your password, you can reset your
password by using Forgot Password option available on
https://evoting.karvy.com or contact Karvy Computershare Private
Limited at toll free no. 1-800-3454-001 or e-mail at evoting@karvy.com
In case of any other queries / grievances connected with voting
by electronic means, you may also contact Mr. V. Rajendra
Prasad of Karvy Computershare Private Limited, at telephone
no. 040-67161510.
V. The results of the electronic voting shall be declared to the
Stock Exchanges after the AGM. The results along with the
Scrutinizers Report, shall also be placed on the website of the
Company.
12. In case of joint holders attending the meeting, only such joint holder who
is higher in the order of names, will be entitled to vote at the Meeting.
13.
The Register of Directors and Key Managerial Personnel
and their Shareholding maintained under Section 170 of the
Companies Act, 2013, the Register of Contracts or arrangements in
which Directors are interested under Section 189 of Companies Act,
2013 and the Certificate from Auditors of the Company certifying
that the ESOP Schemes of the Company are being implemented in
accordance with the Securities and Exchange Board of India (Share
Based Employee Benefits) Regulations, 2014, will be available for
inspection at the Annual General Meeting.
14. Members can also provide their feedback on the shareholder services
of the Company using the Shareholders Satisfaction Survey form
available on the Investor Centre page of the website of the Company
www.hul.co.in. This feedback will help the Company in improving
Shareholder Service Standards.
15. The Ministry of Corporate Affairs has notified provisions relating
to unpaid / unclaimed dividend under Sections 124 and 125 of
Companies Act, 2013 and Investor Education and Protection Fund
(Accounting, Audit, Transfer and Refund) Rules, 2016. As per these
Rules, dividends which are not encashed / claimed by the shareholder
Annual Report 2016-17 Hindustan Unilever Limited
16 Notice

for a period of seven consecutive years shall be transferred to the EXPLANATORY STATEMENT
Investor Education and Protection Fund (IEPF) Authority. The new
IEPF Rules mandate the companies to transfer the shares of ITEM NO. 7
shareholders whose dividends remain unpaid / unclaimed for a period The members of the Company in the Annual General Meeting held on
of seven consecutive years to the demat account of IEPF Authority. 4th April, 2008 had approved the overall limits of the Managerial
Hence, the Company urges all the shareholders to encash / claim Remuneration for Managing Director(s) / Whole-time Director(s) of the
their respective dividend during the prescribed period. The details Company. The said resolution was further modified by the resolution
of the unpaid / unclaimed amounts lying with the Company as on passed in the Annual General Meeting held on 23rd July, 2012 by revision
30th June, 2016 (date of last Annual General Meeting) are available on in the maximum remuneration limits of Managing Director(s).
the website of the Company https://www.hul.co.in/investor-relations/
During the year, a detailed review of the Reward framework was undertaken on
and on Ministry of Corporate Affairs website. The shareholders whose
the basis of the following key principles:
dividend/ shares as transferred to the IEPF Authority can now claim their
shares from the Authority by following the Refund Procedure as detailed Simplify reward;
on the website of IEPF Authority http://iepf.gov.in/IEPFA/refund.html. Ensure consistent alignment of performance measures with
16. In accordance with the aforesaid IEPF Rules, the Company has Companys strategy; and
sent notice to all the shareholders whose shares are due to be Increase the timeframe over which incentives are delivered.
transferred to the IEPF Authority and has also published newspaper One of the principles of the revised Reward framework is to streamline
advertisement. The Company is required to transfer all unclaimed the remuneration structure by simplifying elements of overall reward.
shares to the demat account of the IEPF Authority in accordance with The simplification in remuneration structure will result in some elements
the IEPF Rules after the due date of 31st May, 2017. of remuneration being merged with the basic salary and other heads of
17. Members are requested to contact Karvy Computershare Private remuneration. As a consequence of this proposed change in remuneration
Limited / Investor Service Department of the Company for encashing structure, the present basic salary limits will be exceeded.
the unclaimed dividends standing to the credit of their account. Accordingly, it is now proposed to modify the maximum limits of
The detailed dividend history and due dates for transfer to IEPF are remuneration of managerial personnel including Managing and
available on Investor Relations page on the website of the Company Whole-time Director(s) of the Company as under:
https://www.hul.co.in/investor-relations/. (` in Lakhs)
18. The Securities and Exchange Board of India (SEBI) has mandated Description Existing Maximum limits Proposed Maximum limits
submission of Permanent Account Number (PAN) by every participant (per annum) in terms of the (per annum)
Approval of Shareholders
in securities market. Members holding shares in demat form
Salary Perquisites Salary Perquisites
are, therefore, requested to submit PAN details to the Depository
Participant with whom they are maintaining their demat accounts. In case 290 As per the Rules 400 As per the Rules
Members holding shares in physical form can submit their PAN of CEO/ of the Company of the Company
Managing and within limits and within limits of
details to Karvy Computershare Private Limited / Investor Service
Director(s) of Section 197 of Section 197 of the Act
Department of the Company. the Act
19. For convenience of the Members and proper conduct of the meeting, In case 120 As per the Rules 250 As per the Rules
entry to the meeting venue will be regulated by Attendance Slip, which of other of the Company of the Company
is enclosed with this Annual Report. Members are requested to sign Whole-time and within limits and within limits of
Director(s) of Section 197 of Section 197 of the Act
at the place provided on the Attendance Slip and hand it over at the
the Act
Registration Counter at the venue.
It may be noted that while the increase in overall effective
20. Members desiring any information relating to the accounts are
remuneration is only marginal, the need to revise the present limits of
requested to write to the Company well in advance so as to enable the
basic salary for Managing Director(s) and Whole-time Director(s)
management to keep the information ready.
is necessitated primarily because of merger of other elements of
21. All documents referred to in the accompanying Notice and the remuneration with basic salary and consequent increase in the basic
Explanatory Statement shall be open for inspection without any fee salary. It may be noted that the proposed revised limits are enabling
at the Registered Office of the Company during working hours on all in nature and should remain valid for some years in the future.
working days except Saturdays, up to and including the date of the It may also be noted that the existing limits were approved in April, 2008 and
AGM of the Company. are proposed to be amended now after a period of nine years.

Other terms and conditions:
Registered Office: By Order of the Board
a) Performance linked bonus / commission on profits
Unilever House, Dev Bajpai The Managing Director(s) / Whole-time Director(s) shall be paid
B. D. Sawant Marg, Executive Director Performance Linked Bonus as may be decided by the Board of Directors
Chakala, Andheri (East), Legal & Corporate Affairs or a Committee thereof from year to year, based on achievement of
Mumbai 400 099 and Company Secretary such performance parameters as may be determined by Board of
FCS No: 3354 / DIN: 00050516 Directors or a Committee thereof from time to time provided that the
Mumbai, 17th May, 2017 total remuneration including salary and perquisites paid to all the
Hindustan Unilever Limited Annual Report 2016-17

Managing / Whole-time Director(s) shall not exceed the limits laid down
under Section 197 read with Schedule V of the Companies Act, 2013.
b) Perquisites/ Benefits
The Managing / Whole-time Director(s) shall be entitled to perquisites
like the benefit of rent free accommodation for self, spouse and family
or house rent allowance in lieu thereof, company car with chauffeur,
telephone at residence/cellular phones, statutory contribution to
retirement funds, club membership fees, medical coverage, overseas
medical expenses, leave encashment and long service award and
other benefits/allowances in accordance with the scheme(s) and
rule(s) of the Company from time to time, for the aforesaid benefits.
The total remuneration and perquisites / benefits contemplated
above, including contribution towards PF / superannuation fund,
annuity fund, gratuity fund, etc. payable to all the Managing /
Whole-time Director(s) of the Company shall not exceed 5%, where
there is only one Managing / Whole-time Director(s), and 10% where
there are more than one Managing / Whole-time Director(s), of the
profits of the Company calculated in accordance with Section 198 of
the Companies Act, 2013.
c) In the absence or inadequacy of the profits in any financial year, the
remuneration including the perquisities will be paid to the managerial
personnel including Managing / Whole-time Director(s) in accordance
with the applicable provisions of Schedule V of the Act, and subject
to approval of Central Government. However, in case of payment of
remuneration to Professional Directors as provided under Section II of
Part II of Schedule V of the Act, no approval of the Central Government
shall be required subject to the compliances mentioned under the Act.
This Explanatory Statement may also be considered as the requisite
abstract under Section 190 of the Companies Act, 2013 setting out the
terms, conditions and limits of remuneration for managerial personnel.
None of the Non-Executive Directors or their relatives are concerned or
interested, financially or otherwise, in this resolution. All the Managing and the
Whole-time Director(s) may be deemed to be concerned or interested in this
resolution to the extent it affects the overall remuneration payable to them.
The Board commends the Special Resolution set out at Item No. 7 for the
approval of Members.
ITEM NO. 8
The Board of Directors of the Company had appointed Mr. Dev Bajpai
as an Additional Director of the Company with effect from 23rd January,
2017. In accordance with the provisions of Section 161 of Companies Act,
2013, Mr. Dev Bajpai shall hold office up to the date of the forthcoming
Annual General Meeting. The Board of Directors of the Company in the
same meeting of the Company had also appointed Mr. Dev Bajpai as
a Whole-time Director, liable to retire by rotation, for a period of
5 (five) years with effect from 23rd January, 2017, subject to the approval
of the Members of the Company.
The Company has received notice under Section 160 of the Companies
Act, 2013 from Mr. Dev Bajpai signifying his candidature as Director of
the Company. Mr. Dev Bajpai is not disqualied from being appointed as
a Director in terms of Section 164 of the Act and has given his consent
to act as Director. Mr. Dev Bajpai satises all the conditions as set out in
Section 196(3) of the Act and Part-I of Schedule V to the Act, for being
eligible for his appointment.
Overview Reports Financial Statements 17
A brief profile of Mr. Dev Bajpai, including nature of his expertise, is
provided on page no. 19 of this Annual Report.
The terms and conditions including the remuneration of Mr. Dev Bajpai
as a Whole-time Director shall be governed within the maximum limits of
remuneration proposed under Item No. 7 of this Notice and Explanatory
Statement thereof. The remuneration payable to Mr. Dev Bajpai will be
accordingly decided by the Nomination and Remuneration Committee of
the Company within the overall limits approved by the Shareholders and
shall be in compliance with the overall limits provided under the Act.
Mr. Dev Bajpai holds 33,326 equity shares of the face value of ` 1/- each
in the Company and is not related to other Directors or Key Managerial
Personnel of the Company.
It is proposed to seek the members approval for the appointment of and
remuneration payable to Mr. Dev Bajpai as a Whole-time Director, in
terms of the applicable provisions of the Act and the relevant Rules made
thereunder.
This Explanatory Statement may also be considered as the requisite
abstract under Section 190 of the Companies Act, 2013 setting out
the terms and conditions of appointment of Mr. Dev Bajpai as the
Whole-time Director of the Company.
None of the Directors or Key Managerial Personnel or the relatives except
Mr. Dev Bajpai is concerned or interested, financially or otherwise, in this
resolution.
The Board commends the Ordinary Resolution set out at Item No. 8 for
the approval of Members.
ITEM NO. 9
The Board of Directors of the Company, on the recommendation of
the Audit Committee, approved the appointment and remuneration of
M/s. RA & Co., Cost Accountants (Firm Registration No. 000242), to
conduct the audit of the cost records of the Company for the financial
year ending 31st March, 2018. In terms of the provisions of Section 148(3)
of the Companies Act, 2013 read with Rule 14(a)(ii) of the Companies
(Audit and Auditors) Rules, 2014, the remuneration payable to the
Cost Auditor is required to be ratified by the Members of the Company.
Accordingly, consent of the Members is sought to ratify the remuneration
payable to the Cost Auditors.
None of the Directors or Key Managerial Personnel or their relatives, is
concerned or interested, financially or otherwise, in this Resolution.
The Board commends the Ordinary Resolution set out at Item No. 9 for
the approval of Members.
Registered Office: By Order of the Board
Unilever House, Dev Bajpai
B. D. Sawant Marg, Executive Director
Chakala, Andheri (East), Legal & Corporate Affairs
Mumbai 400 099 and Company Secretary
FCS No: 3354 / DIN: 00050516
Mumbai, 17th May, 2017
Annual Report 2016-17 Hindustan Unilever Limited
18 Profile of Directors

PROFILE OF DIRECTORS
(Seeking Appointment / Re-appointment)

HARISH MANWANI (DIN: 00045160) PRADEEP BANERJEE (DIN: 02985965)

Mr. Harish Manwani (63) assumed charge as the Non-Executive Chairman
of the Company with effect from 1st July, 2005. He was the Chief Operating
Officer of Unilever and a member of the Unilever Leadership Executive
(ULE) until 31st December, 2014. He is currently Global Executive Advisor
to Blackstone Private Equity Group.
Mr. Manwani joined the Company in 1976. He joined the Board of the
Company in 1995 as a Director responsible for the Personal Products
business. In addition, he held regional responsibility as the Category
Leader for Personal Products for the then Central Asia & Middle East
(CAME) Group.
Mr. Pradeep Banerjee (58) joined the Company as a Management Trainee
in 1980. He has held series of assignments in Supply Chain, Research &
Development and Categories. Mr. Banerjee became the Vice President -
Technical (Home and Personal Care) in 2003 and later moved to the UK in
2005 as Vice President - Global Supply Chain for Personal Care category.
He also served as the Vice President for Global Procurement in Singapore.
Mr. Banerjee was appointed as Executive Director - Supply Chain of the
Company in March, 2010. He holds a Bachelors Degree in Engineering
(Chemical) from IIT Delhi. He is a Member of Risk Management Committee
of the Company.

In 2000, Mr. Manwani moved to UK as Senior Vice President for the Global
Hair Care and Oral Care categories and in early 2001, he was appointed as
President - Home & Personal Care (HPC), Latin America Business Group.
He also served as the Chairman of Unilevers Latin America Advisory
Council. In 2004, he was appointed as President, HPC North America
Business Group and in April 2005, was elevated to the Unilever Executive
as President - Asia & Africa, the region was later extended to include
Central and Eastern Europe. In 2011, he was appointed Chief Operating
Officer of Unilever.
In 2008, Mr. Manwani received the CNBC Asia Business Leader of the Year
Award and in 2012, he was conferred the Public Service Medal (Friends of
Singapore) by the Singapore Government.
Mr. Manwani is an Honours Graduate from the Mumbai University and
holds a Masters Degree in Management Studies. He has also attended the
Advanced Management Programme (AMP) at Harvard Business School.
Mr. Manwani is a member of the Nomination and Remuneration Committee
of the Company.
Directorship in other Companies
Indian School of Business
Whirlpool Corporation
Directorship in other Companies
Unilever Nepal Limited
Unilever India Exports Limited
Membership / Chairmanship of Board Committees in other Companies
Unilever India Exports Limited
Nomination and Remuneration Committee Member
Corporate Social Responsibility Committee - Member
P. B. BALAJI (DIN: 02762983)
Mr. P. B. Balaji (47) joined the Company as a Management Trainee in
May 1993 and has worked in number of roles in Finance and Supply Chain
over a period of 20 years. Mr. P. B. Balaji was the Vice President, Finance
for Unilever America Supply Chain, based out of Switzerland, responsible
for financial aspects of an 18 billion Supply Chain. Prior to that, he was
the Group Chief Accountant of Unilever worldwide based in London. Before
moving to London, Mr. P. B. Balaji has served as the Vice President, Finance
for the Home and Personal Care business in India and earlier as the
Vice President, Treasury for the AAR region based out of Singapore.

Economic Development Board, Singapore Mr. P. B. Balaji is a Mechanical Engineer from IIT Chennai and has a PGDM
Pearson PLC from IIM Kolkata. Mr. P. B. Balaji was appointed as the Executive Director
Finance & IT and Chief Financial Officer of the Company in July 2014.
Qualcomm Incorporated
Nielsen Holdings PLC He is a Member of Stakeholders Relationship Committee, Corporate
Social Responsibility Committee and Risk Management Committee of the
Company.
Membership / Chairmanship of Board Committees in other Companies
Directorship in other Companies
Whirlpool Corporation
Hindustan Unilever Foundation
Corporate Governance and Nominating Committee -Member
Human Resources Committee - Member Bhavishya Alliance Child Nutrition Initiatives
Economic Development Board, Singapore
Human Resources Committee - Member
Membership / Chairmanship of Board Committees in other
Pearson PLC Companies
Nomination and Governance Committee Member
Reputation and Responsibility Committee - Member Nil

Qualcomm Incorporated
Compensation Committee Member
Nielsen Holdings PLC
Compensation Committee - Member

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 19

DEV BAJPAI (DIN: 00050516) Membership / Chairmanship of Board Committees in other Companies
Mr. Dev Bajpai (51) was appointed as the Executive Director Legal and
Unilever Nepal Limited
Company Secretary and as a member of the Management Committee
of the Company in 2010. Mr. Bajpai took additional responsibility Audit Committee - Member
of Corporate Affairs function in the year 2012. He has 29 years of
experience in the areas of Legal, Compliance, Tax and Corporate Affairs DIRECTORS INTEREST
across diverse industries including Automobiles, FMCG, Hospitality and
Private Equity. Prior to joining the Company, Mr. Bajpai has worked in None of the Directors of the Company is inter-se related to each other.
Maruti Udyog Limited, Marico Limited, The Indian Hotels Company Limited The Directors seeking approval for appointment / re-appointment may be
and ICICI Venture Funds Management Company Limited. deemed to be concerned or interested to the extent of shares held by them
in the Company as given in the table below:
Mr. Bajpai has been a part of committees of apex industry organisations
like Confederation of Indian Industry and Federation of Indian Chambers Name of the Director No. of Shares % Holding
of Commerce and Industry.
Harish Manwani 22,130 0.0010
Mr. Bajpai is a Fellow Member of the Institute of Company Secretaries
Pradeep Banerjee 52,886 0.0024
of India and holds a law degree from University of Delhi. He has also
completed an Executive Program for Corporate Counsels conducted by P. B. Balaji 12,406 0.0005
Harvard Law School.
Dev Bajpai 33,326 0.0015
He is a member of the Risk Management Committee of the Company.

Directorship in other Companies

Unilever Nepal Limited
Hindustan Unilever Foundation
Bhavishya Alliance Child Nutrition Initiatives
The Advertising Standards Council of India
Indian Beauty and Hygiene Association

Annual Report 2016-17 Hindustan Unilever Limited

20 Directors Report & MDA

DIRECTORS REPORT
and Management Discussion and Analysis
To the Members,
Your Companys Directors are pleased to present the 84th Annual Report of the Company, along with Audited Accounts, for the financial year ended
31st March, 2017.

1. FINANCIAL PERFORMANCE (STANDALONE)

1.1 Results
(` crores)

For the year ended For the year ended

31st March, 2017 31st March, 2016
Revenue from operations (including excise duty) 34,487 33,491
Profit before exceptional items and tax 6,155 5,977
Profit for the year 4,490 4,137

1.2 Category Wise Turnover

(` crores)

For the year ended For the year ended

31st March, 2017 31st March, 2016
Sales Others* Sales Others*
Home Care 11,123 223 10,585 228
Personal Care 16,078 226 15,791 220
Foods 1,102 22 1,078 18
Refreshments 4,795 53 4,434 48
Others (including Exports, Infant and Feminine Care) 797 22 1,043 9
TOTAL 33,895 546 32930 524
*Others include service income from operations, relevant to the respective businesses.

1.3 Summarised Profit and Loss Account

(` crores)

For the year ended For the year ended

31st March, 2017 31st March, 2016
Sale of products (including excise duty) 33,895 32,929
Other operational income 592 562
Total Revenue 34,487 33,491
Operating Costs 28,440 27,742
Profit Before Depreciation, Interest, Tax (PBDIT) 6,047 5,749
Depreciation 396 321
Profit Before Interest & Tax (PBIT) 5,651 5,428
Other Income (net) 504 549
Profit before exceptional items 6,155 5,977
Exceptional items 241 (31)
Profit Before Tax (PBT) 6,396 5,946
Taxation 1,906 1,809
Profit for the year 4,490 4,137
Basic EPS (`) 20.75 19.12

The financial statements for the year ended 31st March, 2017 are the first the Company has prepared under Ind AS (Indian Accounting Standards).
The financial statements for the year ended 31st March, 2016 have been restated in accordance with Ind AS for comparative information.
Hindustan Unilever Limited Annual Report 2016-17

2. DIVIDEND
Your Directors are pleased to recommend a Final Dividend of ` 10/-
per equity share of face value of ` 1/- each for the year ended
31st March, 2017. The Interim Dividend of ` 7/- per equity share was paid
on 15th November, 2016.
The Final Dividend, subject to the approval of Members at the
Annual General Meeting on 30th June, 2017, will be paid on or after
Wednesday, 5th July, 2017 to the Members whose names appear in the
Register of Members, as on the date of Book Closure, i.e. from Saturday,
24th June, 2017 to Friday, 30th June, 2017 (both days inclusive). The total
dividend for the financial year, including the proposed Final Dividend,
amounts to ` 17/- per equity share and will absorb ` 4,394 crores,
including Dividend Distribution Tax of ` 715 crores.
3. RESPONSIBILITY STATEMENT
The Directors confirm that:
in the preparation of the Annual Accounts, the applicable accounting
standards have been followed and that no material departures have
been made from the same;
they have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable
and prudent, so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profits of the
Company for that period;
they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 2013, for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
they have prepared the annual accounts on a going concern basis;
they have laid down internal financial controls for the Company and such
internal financial controls are adequate and operating effectively; and
they have devised proper systems to ensure compliance with the
provisions of all applicable laws and such systems are adequate and
operating effectively.
MANAGEMENT DISCUSSION AND ANALYSIS
To avoid duplication between the Directors Report and the Management
Discussion and Analysis, we present below a composite summary of
performance of the various businesses and functions of the Company.
4. ECONOMY AND MARKETS
While the global economies continued to witness slow growth during
the current year as well, the Indian economy on a macro basis stayed
fairly robust. The below par performance of global economy was reflected
in a continued slowdown in growth in most emerging and developing
economies, driven by weaker capital inflows and a subdued global trade.
India, however, was one of the faster growing large economies in the
world, with a currency that performed better than most other emerging
market currencies.
There was a significant upturn in commodity prices after a year of
deflation. Consumer spending remained subdued during the early part
of the year impacted by two years of drought. The gradual recovery of
the market was temporarily impacted by adverse liquidity conditions post
demonetisation and especially in the December quarter. Overall, this was
a year of moderate growth rates across FMCG categories.
Given the backdrop of slow market growth, volatile input cost environment
and heightened competitive intensity, the operating environment for your
Company during the year continued to be challenging.
Your Companys performance for the year 2016-17 has to be viewed in the
context of aforesaid economic and market environment.
Overview Reports Financial Statements 21
5. PERFORMANCE OF BUSINESSES AND
CATEGORIES
Your Company delivered yet another year of resilient performance, aided
by healthy marketing and trade investments, exciting innovations, and
stepped up market development and sharper in-market execution. Your
Company continued to leverage and benefit from the inputs received from
Unilever across various aspects of the business, including technology,
innovation, services and marketing mix that enabled your Company to
launch several new offerings to serve the needs of consumers.
The year began with a sharp upturn in the commodity cycle with crude
and vegetable oil prices rising significantly whilst the market continued
to remain volatile. Your Company had proactively passed on the benefits
of lower commodity costs to the consumers when the commodity prices
were deflationary last year. During the year, your Company had to take
calibrated price increases as commodity prices increased sharply.
To fuel growth, your Company continued to deploy effective cost savings
programmes. These savings not only aid in deploying investments to build
brands and capabilities but also help the Company in delivering its profit
objective. During the year, an extensive review of the business under the
Zero Based Budgeting project was conducted and your Company has
crafted some well-considered plans to further drive operating efficiencies
in the coming years.
Your Company strives to be the supplier of choice across the distribution
channels it operates in. During the year, your Company continued to focus
on quality of distribution in General Trade, improving in-store presence
in Modern Trade and building capabilities in e-commerce. Your Company
continued to build upon the Winning in Many Indias agenda to benefit
from geographical focus while leveraging scale. Your Company also
continued to focus on magnifying innovations in the marketplace through
brilliant execution and on building markets of the future or what we call
as market development.
During the year, your Company re-organised its business under four major
categories i.e. Home Care, Personal Care, Foods and Refreshments.
The change in the reporting structure is in compliance with the new
Indian Accounting Standards (converged IFRS Reporting). Home Care
category comprises Fabric Wash, Household Care and Water businesses.
Personal Care category includes Personal Wash, Skin Care, Hair Care,
Oral Care, Colour Cosmetics and Deodorants. Foods category includes
Packaged Foods and Popular Foods. Refreshments category comprises
Tea, Coffee, Ice cream and Frozen Desserts. The residual segment of
Others includes Exports, Infant and Feminine care.
5.1 Home Care
The year witnessed volatile crude oil prices coupled with significant
competitive intensity. Your Company optimised media and trade spends,
maintained competitive prices and invested in developing new segments,
to ensure sustainable growth.
The Fabric Wash business delivered strong topline growth
through premiumisation led by Surf. In the emerging segments of
Machine Wash, Surf excel Matic and Comfort Fabric Conditioner continued
to perform well. Your Company successfully launched Surf excel Matic
liquids during the year. Sunlight soap, which has been protecting the
colours of the consumers clothes for 75 years, launched a unique
mentorship programme -Sunlight Banglar Guner Rang to preserve the
true colours of Bengal, which is its rich culture.
In Household Care, Vim continued to develop and premiumise
the category through the liquids portfolio. The proposition of
power of 100 lemons combined with a superior product and great
activation helped the product become more appealing and desirable
amongst consumers. Domex brought its social mission alive by actively
driving awareness about the issue of open defecation in India through
the See-Through Toilet Installation in Mumbai during the Global Citizen
event. The activation provided consumers with first-hand exposure to the
Annual Report 2016-17 Hindustan Unilever Limited
22 Directors Report & MDA
difficulties and hardship associated with the practice of open defecation,
thereby driving the need for improved access to toilets.
Pureit, the worlds largest selling water purifier, continued to strengthen
its position as a responsible and purpose-driven brand. Pureits mission
is to provide safe drinking water to 100 million people by 2020. By
2016, Pureit provided over 74 billion litres of safe drinking water. Pureit
continued to target potential consumers from the bottom of the pyramid
and partnered with Micro Finance Institutions (MFIs) to provide them
access to safe drinking water through affordable instalments. Pureit
expanded its play in the growing branded Reverse Osmosis (RO) segment
with a successful launch of Classic RO range of water purifiers. This has
democratised the segment by providing consumers a quality range of RO
water purifiers at an affordable price.
5.2 Personal Care
The strategic thrusts of Personal Care business include strengthening
the core, accelerating premiumisation, investing in developing segments
of the future and building capabilities such as digital and e-commerce
for the future. This was achieved through innovations, cut-through
advertising, brand engagement platforms and touching millions of
consumers through market development efforts. Your Company believes
that there is substantial potential that exists in all segments within its
Personal Care business. The mission of this business is to inspire a billion
Indians to attend better to their personal care.
The year witnessed a significant inflation in key raw material prices for the
Personal Wash Category. Your Company took calibrated pricing actions to
offset the cost increases. The price increases in this category impacted
the volumes. The business witnessed muted growth in this category for
most part of the year. With steps taken to address some issues around
Lux, Hamam and Lifebuoy soap brands, the growth trend was reversed
in the last quarter, with the category registering reasonable growth. Lux
was supported by a big intervention, the Lux Golden Rose Awards, a
buzz-creating brand engagement platform. Your Company continued to
invest behind market development of handwash and bodywash.
Skin Care category grew well on the back of both core as well as
premium offerings. Fair & Lovely drove consumption through a focussed
campaign based on local insights and premium offerings like BB cream.
Ponds sustained its momentum by strengthening its proposition of
Spotless Radiance while Lakm continued to lead with innovations like the
colour-transform cream. Your Company continued to lead market
development of body lotions with Vaseline through the healing power
activation of the brand. Your Company refreshed the portfolio play in
Facial Cleansing across Fair & Lovely, Ponds and Lakm. Towards the
end of the year, your Company made a foray into the Baby Care segment,
with the launch of a range of products under the brand, Baby Dove.
Hair Care sustained its strong performance, with all brands growing
ahead of the market. Innovations and well-crafted activations have led
to a preference for Hair Care brands with Dove, Clinic Plus, Sunsilk and
TRESemm, all doing well.
Oral Care had a subdued performance. Closeup was relaunched
with an improved product towards the latter part of the year and the
brand continued to build the youth-oriented campaign on making your
First Move. Pepsodent has also been strengthened with an improved
flavour and an activation built on the insight of children craving for
sweets during festive occasions. The Oral Care category is undergoing
a shift in its construct with naturals, freshness and care & problem
solution segments moving towards equal proportions in the market. This
reshaping of the category has created new growth opportunities for your
Company, especially in the naturals segment.
Lakm Colors continues to drive premiumisation by upgrading users
through the long lasting 9 to 5 platform, and taking the latest trends from
the runway to the consumers under the Absolute platform. The brand
has continued to pioneer the launch of the best makeup innovations, with
the launch of Argan Oil variant as well as Enrich Matte Lipsticks, which
have been well received.
Hindustan Unilever Limited Annual Report 2016-17
In Deodorants, through Axe, your Company has further strengthened its
position at the premium-end with the launch of fine fragrances under the
Signature range, while building its current assortment with new variants
in the perfume sprays segment.
During the year, your Company made its foray into the fast-evolving
naturals segment by reviving the brand LEVER Ayush and through the
acquisition of Indulekha. LEVER Ayush was first launched in the year 2002 both
in product and services space. LEVER Ayush has been re-launched with new
mixes in select geographies as a master brand across major categories like
Skin Cleansing, Skin Care, Hair Care and Oral Care and promises the 5,000 year
old wisdom of ayurveda for modern day beauty problems. Indulekha has started
off well post acquisition, gaining distribution, and through improved marketing
under your Company. Your Company will continue to expand the footprint of this
brand. Your Company also introduced naturals variants in core brands such as
Fair & Lovely Ayurveda, Clinic Plus Ayurveda and TRESemm Botanique, to
ensure your Company builds a comprehensive portfolio at scale in this fast
growing segment.
5.3 Foods
The Foods business of your Company comprises culinary products such as
jams, ketchups and squashes under Kissan; soups, soupy noodles, meal
makers and seasonings under Knorr and staple foods comprising atta and
salt under Annapurna. While your Company continued to grow ahead of
the markets in most categories, the overall growth of the categories and
consequently our business slowed down as compared to the previous years.
Kissan maintained its leadership across categories while increasing
penetration and reaching more households than ever before. Both
ketchup and jam showed strong distribution increase and strengthening
of consumer preference. The launch of three exciting new variants of
premium jams helped the brand reach new households while contributing
to the growth of the jams category.
Knorr brand had a healthy performance with the convenient instant
soups single serve format performing particularly well. Your Company
expanded its cook up soup offerings with the launch of international
flavours in a 4 serve format. This, supported by widespread sampling,
ensured that the soup category has grown in relevance as a healthy
in-between meal option. The Knorr Meal Maker portfolio continued to be
led by in-store sampling and activations.
Your Company continued its focus on improving the profitability of the
Annapurna business by driving efficiencies across the value chain.
Your Company also scaled up its experiential marketing initiatives. Given
the relevance of market development, it is critical that consumers sample
your Companys products and discover the great taste and convenience
that the products offer. As an important player in the industry, your
Company continues to partner with the Regulator towards a more balanced
approach to foods regulations which takes care of the consumers interest
while fostering innovation.
5.4 Refreshments
The Refreshments business delivered a good year with both Beverages
and the Ice cream & Frozen Desserts portfolio registering healthy growth.
Most of the brands continued to grow well and improved their brand
equity scores. There were new products and variants launched across
categories which were received well by consumers.
The Beverages segment delivered broad based growth across both Tea
and Coffee. The growth across key brands was driven by leveraging the
Winning in Many Indias approach.
Brooke Bond Red Label walked the talk on its purpose of making the
world a more welcoming place by sponsoring Indias first transgender
music band Brooke Bond Red Label 6-Pack Band. This initiative was
lauded as a path-breaking one and was conferred with several prestigious
national and international awards, including a Grand Prix at the Cannes
Lions Festival.

Brooke Bond Red Label and 3 Roses Natural Care Tea, with its
differentiated immunity benefit of using the goodness of ayurvedic
ingredients, continued to delight consumers. Your Company continued
to grow the Green Tea category, under the brand Lipton on the back of
sustained market development.
The Coffee business, under the brand BRU, delivered strong growth, led
by the instant coffee franchise. The brand continued its pioneering task
of consistently driving penetration of instant coffee through innovative
sampling methods and a compelling proposition. The pure coffee
franchise of BRU Gold continued to lead category premiumisation.
The Ice cream & Frozen Desserts business continued to deliver strong
performance with double-digit growth and improved profitability. During
the year, there was increased focus on widening distribution and making
brands more accessible for consumers. The impulse portfolio continued
to grow faster with improved brand equity across Cornetto and Feast. New
variants of Cornetto as well as Kulfi performed well in the market.
5.5 Subsidiaries and Joint Venture
The summary of performance of the subsidiary and joint venture
companies is provided below:
Unilever India Exports Limited
Unilever India Exports Limited (UIEL) is a 100% subsidiary of your
Company and is engaged in FMCG exports business. The focus of the
FMCG exports operation is two-fold: to develop overseas markets by
driving distribution of ethnic brands, such as Kissan, BRU, Brooke Bond,
Lakm, Pears among the Indian diaspora in international markets and
to effectively provide cross-border sourcing of FMCG products to other
Unilever companies across the world.
The topline growth of the Company was driven by robust growth in Personal
Products segment. Brands like Pears, Lakm, Fair & Lovely and Vaseline
have registered healthy performance in the focussed markets. Overall, the
business delivered healthy profit during the year. UIEL continued to be one
of the most preferred sourcing companies for other Unilever countries.
Lakme Lever Private Limited
Lakme Lever Private Limited (LLPL), is a 100% subsidiary of the Company
and has 355 salons, of which 54 salons are LLPL owned / managed and
301 are franchisee salons. LLPL also operates a manufacturing unit at
Gandhidham which carries out job work operations for your Company
manufacturing toilet soaps, bathing bars and detergent bars.
In a market witnessing lower discretionary spends, LLPL expanded its salons
business with a net addition of 75 salons. The Customer Club was reinvented
as Runway Rewards with delightful introductions like a Showstopper tier
along with thematic promotion campaigns which helped drive footfall growth.
The Show Stopping Bridal Collection was launched at Lakm Fashion Week
and activated with the Cover Bride campaign, with the winning bride gracing
the cover of a leading womens magazine. The business is implementing an
integrated IT platform which will leverage technology to drive growth and
optimise resources. Your Company will continue to support LLPL to drive
growth in this attractive market opportunity.
The Gandhidham unit of LLPL is one of the largest Dove Bar manufacturing units
of your Company. During the financial year, the unit doubled the manufacturing
capacity of Dove. The unit has performed well and has delivered key financial
parameters. This unit has also pioneered end-of-line operations through high
speed lines and auto-bundling machines for Personal Wash category.
Ponds Exports Limited
The leather business, under the subsidiary Ponds Exports Limited faced
a tough year, due to challenging economic conditions in Europe-its main
market which was exacerbated by a weaker Euro.
During the year, your Company sold the movable assets and inventory
of the leather business to M/s. Hindustan Foods Limited and thereby,
discontinued the business operations.
Overview Reports Financial Statements 23
Unilever Nepal Limited
Unilever Nepal Limited (UNL), a subsidiary of your Company, is engaged in
manufacturing, marketing and sale of detergents, toilet soaps, personal
products and laundry soaps in Nepal.
In circumstances that remained tough in Nepal, UNL has delivered
profitable growth. Unilever Nepal brands continue to have very good
equities and are well admired. The strength of brands and continued
investments behind these brands have enabled UNL to maintain
leadership across categories in the market.
Hindustan Unilever Foundation
Hindustan Unilever Foundation (HUF) is a not-for-profit Company that acts
as a vehicle to anchor water management related community development
and sustainability initiatives of Hindustan Unilever Limited. HUF operates
the Water for Public Good programme, with specific focus on farm based
livelihoods, in 54 districts across India in partnership with 20 NGOs. HUF
also supports several knowledge initiatives in this area. This partnered
programme of HUF has achieved the following community benefits:
Water conservation: Cumulative and collective water potential of more
than 300 billion litres has been created through improved supply and
demand management of water.
Crop yield: The projects undertaken have generated additional
agriculture production of more than six lakh tonnes.
Person days: These projects have generated more than
37 lakh person days of employment.
Capacity building: Over one lakh and seventy thousand people have
been trained in water conservation activities, better agricultural
practices and related areas.
The cumulative impacts of these projects initiated by HUF have been
independently assured.
Bhavishya Alliance Child Nutrition Initiatives
Bhavishya Alliance Child Nutrition Initiatives (BACNI) is a not-for-profit
subsidiary of the Company and conducts hand washing behaviour change
programme with an aim to reduce diarrhoea and pneumonia in children
under the age of five years.
During the year, the Bihar Handwashing programme (BHP) reached out to
3.3 million children across 8,482 schools and conducted 7,600 sessions to
educate mothers who are the key influencers for their children. Through
our sustained efforts under this programme, the Government of Bihar has
issued a directive to include Handwashing Session before Mid-Day Meals,
thereby assisting in inculcating the habit of handwashing with soaps.
Other Subsidiaries
Daverashola Estates Private Limited is a subsidiary of the Company,
which has been exploring opportunities to enter into appropriate business
activities.
Jamnagar Properties Private Limited is a subsidiary of the Company
whose land is under litigation.
Levers Associated Trust Limited, Levindra Trust Limited and
Hindlever Trust Limited subsidiaries of the Company, act as trustees of
the employee benefits trusts of the Company.
Joint Venture
Kimberly Clark Lever Private Limited
Kimberly Clark Lever Private Limited (KCLL) is a joint venture between
your Company and Kimberly-Clark Corporation (KCC), USA, with infant
care diapers as its primary product category sold under the brand Huggies
and feminine care products sold under the brand Kotex. The business
continued to face tough competitive environment especially on pricing
and trade spends. There is a continuing shift in the market from regular
diaper to the pants version which had an adverse impact on the growth.
During the year, your Company announced its intention to divest its stake
Annual Report 2016-17 Hindustan Unilever Limited
24 Directors Report & MDA
in KCLL to the JV partner KCC. This decision is in line with the Companys
objective to focus on the core business. In the interim, both parties remain
committed in ensuring that the business operations continue as usual
and the transition is smooth.
Pursuant to the provisions of Section 129(3) of the Companies Act, 2013
(Act), a statement containing salient features of financial statements
of subsidiaries, associates and joint venture companies in Form AOC 1
is attached to the Accounts. The separate audited financial statements
in respect of each of the subsidiary companies shall be kept open for
inspection at the Registered Office of the Company during working hours
for a period of 21 days before the date of the Annual General Meeting.
Your Company will also make available these documents upon request
by any member of the Company interested in obtaining the same. The
separate audited financial statements in respect of each of the subsidiary
companies are also available on the website of your Company at
https://www.hul.co.in/investor-relations/annual-reports/.
Your Company has not made any downstream investments in subsidiaries
or joint venture during the year.
6. CUSTOMER DEVELOPMENT
The Customer Development eco-system of your Company encompasses
capturing the demand, fulfillment of demand and generation of demand.
As far as demand capturing is concerned, the focus of your Company
has been on driving quality of coverage and increasing the assortment
using data-centric and analytical approach. Your Company has also
set up an integrated front-end system for performance and presence
management. With respect to demand fulfillment, process and technology
interventions have been used for improving service and efficiencies. For
demand-generation, the strategy of your Company encompasses winning
in traditional trade in both open and closed formats, winning in route to
market as well as winning in emerging channels like Modern Trade and
e-commerce.
In traditional trade, the focus has been on optimal servicing with
appropriate beat lengths and in improving the in-store visibility. In
route to market, your Company has been driving the distribution of
the market development portfolio through differentiated investment
pattern.
In Modern Trade, the foundation of your Companys success is based
on collaborative planning with key customers. Your Company has also
significantly improved investments in assisted selling. Building brands
in store remains a key thrust in this channel and has yielded good results
and translated into healthy growth during the year on the back of growing
brand penetrations. The e-commerce space is growing exponentially in
India. Your Company has made significant investment in capability building
in e-commerce, and is committed to being the best FMCG player in this
channel. A specialised team is working closely with all key e-commerce
partners to create competitive advantage for the business and scaling up
the business at a rapid pace.
Your Company has derived the benefits of tailor-made consumer and
customer plans across categories as part of Winning in Many Indias
agenda due to strengthened connect with customers, consumers and
shoppers. This will continue to be a source of competitive advantage for
your Company.
Your Company continues to focus and drive Project Shakti, the initiative
for driving social responsibility and sustainability, aimed at enhancing
livelihoods and building opportunities for small scale entrepreneurs in
rural India. Your Company has now close to 72,000 Shakti Entrepreneurs
(Shakti Ammas) across 16 states, making a respectable living by
distributing your Company products.
Your Company has been a thought leader in the area of big data and
analytics as a tool to drive sustainable growth. The Company uses
intelligent analytics at the back end, to deliver better on-shelf availability
in stores. Your Company continues to strengthen this capability to stay
ahead of the competition.
Hindustan Unilever Limited Annual Report 2016-17
7. SUPPLY CHAIN
Your Companys Supply Chain agenda was centered on five core
areas - Customer Service Excellence, Creating Consumer Delight by
dedicated end-to-end Quality Focus, Creating Value through cost savings
programme, Sustainability and Supplier Partner to Win Programme.
The service levels improved steadily with Customer-Case Fill-On-Time (CCFOT)
increasing to more than 95%. This was achieved by developing a segmented
approach and having a clear roadmap developed for Category, Geography and
Channels. Your Company continues to focus on last-mile delivery improvement
programme and on strengthening the Sales and Operation Planning (S&OP)
process to facilitate shorter planning cycles and response to market demands.
This capability helps to align goals across Finance, Customer Development,
Marketing, Research & Development and Supply Chain.
During the year, your Company set up a new state-of-the-art manufacturing
facility in Doom Dooma Industrial Estate, Assam in record time and has
already commenced commercial production. The first despatch was
completed on 15th March, 2017. This unit will augment the production
capacity of Personal Care products and make it a strategic sourcing site for
the Company. The unit reinforces the Companys long-term commitment to
the state of Assam and to Make in India. Your Company acknowledges the
excellent support it received in this regard from the Government and the
local community.
Your Company continued its focus on quality by linking and improving
on-shelf consumer relevant quality standards, thereby bringing together
every part of the business to work on improving overall consumer
experience. Delighting consumers everyday is core to how your Company
drives quality in its products and has been able to substantially improve the
on-shelf quality by 37% over 2015.
With a robust funnel of savings programme, your Company continued on its
path of delivering consistent end-to-end cost savings and achieved savings
of six per cent of the total cost. Your Company brought down its inventory
holding by 2.7 days.
Your Company has increased its renewable energy share to 28% in line
with the Unilever Sustainable Living Plan commitments. This was achieved
by converting agricultural process waste from its operations into fuel,
besides increasing the utilisation of traditional biofuels like agri-waste.
Your Company installed equipment to convert process wastes such as
spent coffee and tea from beverages factories into fuel for boilers and
air-heaters. Specialised burners were installed to utilise heavy vegetable
oil residue from DFA operations as fuel, substituting furnace oil. Factory
teams also worked to reduce specific energy consumption by eliminating
idle operation of equipment, rightsizing of drives and installation of digital
controllers. This has also contributed to reduction in your Companys CO2
footprint by 13% over the previous year.
All factories and warehouses continue to maintain zero non-hazardous
waste to landfill site status. Year-on-year reduction of water usage
continues to be a key priority for your Company. Increase in harvested rain
water utilisation in processes, reuse of treated effluent water, reduction
of water losses from boiler and cooling tower blowdown, process water
requirement optimisations, etc. have all contributed to reduction of fresh
water abstraction and lowering of water consumption across factories by
nine per cent over previous year.
Your Company continues to progress on world-class manufacturing journey
and covers 25% of production cost perimeter. Factories started delivering more
than 10% cost savings on perimeter by eliminating non-value added activities.
Your Companys Partner to Win programme, aims at developing
Joint Business Plans with suppliers and business partners. It has
resulted in reduced lead-time and costs, improved reliability and new
innovation- delivery.
8. RESEARCH & DEVELOPMENT
Your Company continues to derive sustainable benefit from the strong
foundation and long tradition of Research & Development (R&D) at

Unilever, which differentiates it from many others. New products,
processes and benefits flow from work done in various Unilever R&D
centres across the globe, including India. The Unilever R&D labs in
Mumbai and Bengaluru work closely with the business to create exciting
innovations to help us win with our consumers. With world-class facilities
and a superior science and technology culture, your Company is able to
attract the best talent to provide a significant technology differentiation to
its products and processes.
The R&D programmes, undertaken by Unilever globally, are focussed
on the development of breakthrough and proprietary technologies with
innovative consumer propositions. The R&D team comprises highly
qualified scientists and technologists working in the areas of Home Care,
Personal Care, Foods, Refreshments and Water Purification and critical
functional capability teams in the areas of Regulatory, Clinicals, Digital
R&D, Product & Environment Safety and Open Innovation.
Your Company has an existing Technical Collaboration Agreement (TCA)
and a Trade Mark License Agreement (TMLA) with Unilever which was
entered in the year 2012. The TCA provides for payment of royalty on net
sales of specific products manufactured by your Company, with technical
know-how provided by Unilever. The TMLA provides for the payment
of trade-mark royalty, as a percentage of net sales on specific brands,
where Unilever owns the trademark in India. The pace of innovations and
the scope of services have expanded over the years. Unilevers global
resources are providing greater expertise and superior innovations. Your
Company is enjoying the benefits of an increasing stream of new products
and innovations, backed by technology and know-how from Unilever,
such as those mentioned below. This has helped in bringing to the Indian
consumers bigger, better and faster innovations.
During the year, your Company introduced several innovations across
categories. Dove, a beauty brand trusted by women and mothers around
the world, recently marked its entry into the Baby Care category in India
with the launch of Baby Dove during the year. Developed for babies with
normal to dry skin, the range includes the Baby Dove Rich Moisture
Baby Bar, Baby Lotion, Diaper Rash Cream, Baby Wipes and a Sensitive
Moisture Baby Bar to take special care of babies with sensitive skin.
The range is built on its heritage of moisture, mildness and care to
develop cleansers enriched with Doves iconic moisturising cream - a
technology to protect the skins natural barrier. Dermatologist-tested and
pediatrician-approved, Baby Dove range is formulated uniquely to
replenish essential nutrients and is hypoallergenic and pH-neutral for
skin types of all babies.
Lifebuoy continued to delight consumers by creating winning mixes and
raising the bar on its germ protection technologies through Active Silver
Formula to give strongest protection against both ordinary and stronger
infection-causing germs.
In the Fabric Wash business, Surf excel Hand wash and Matic powders
were relaunched with increased stain-removal efficacy, thereby driving
better in-wash, tough and oily stain removal. Fabric conditioner was also
relaunched with improved performance and fragrance delivery.
In the Water business, your Company launched Classic RO - a range
of five product variants in the affordable reverse osmosis (RO) devices
segment of the market. The R&D team developed a novel manufacturing
process for making carbon filters, which resulted in a 60% reduction in
CO2 emissions with a significant reduction in electricity consumption,
manpower and water-use compared to the earlier process.
In the Skin Care business, Ponds, for the first time, launched
pimple-clear face wash based on thymol-terpineol technology to visibly
clear pimples, such that the difference could be seen in just three days.
Next generation skin-lightening molecule Hexyl Resorcinol and
diamond powder was introduced in Lakm Perfect Radiance Serum
portfolio to claim Hi-Res Crystal Radiance. Lakm also, for the first time,
introduced a transformation technology in the form of Lakm 9 to 5 CC
transform cream with key claim of Fairness cream that changes color to
give a make-up finis.
Overview Reports Financial Statements 25
In Hair Care, TRESemm offered Beauty-full Volume where unique
Reverse Wash System was developed for consumers seeking voluminous
hair. TRESemm was awarded Product of the Year for its range of
shampoo and conditioners.
LEVER Ayush introduced 16 products and 23 SKUs as part of the
launch across Skin Care and Cleansing, Body, Oral and Hair Care.
LEVER Ayush products, formulated with ayurvedic ingredients written in the
5000-years-old granthas, use ingredients that are highly beneficial to the
skin, hair and teeth. The goodness of ingredients like turmeric, saffron,
cows ghee, cardamom, rock salt, etc. are authentic solutions to modern
day beauty problems.
In Foods, the year saw the launch of new variants of premium jams of
Kissan. These have met with strong initial success and we continue to
expand their availability footprint.
In Beverages, your Company launched for the first time, boilable tea
bags in 3 Roses called tasty tea buds in Tamil Nadu as a value-added
tea proposition. As part of your Companys commitment to sustainable
sourcing, your Company contributes towards defining Maximum Residue
Limits (MRLs) for pesticides in tea through the Plant Production
Code Committee, an initiative of the Tea Board of India. Unilever has
commissioned a research project with Centre for Agriculture and
Biosciences International (CABI) and Tea Research Institutes in India to
evaluate ecological approaches for pest management in tea.
R&D has further contributed to the Companys sustainability agenda.
Your Company was ranked 2nd in the first-ever India Access to Nutrition
Index (ATNI). Your Company continues to work on improving the taste and
nutritional quality of its products using globally recognised standards.
100% of the childrens Frozen Desserts and edible ice products have
110 kilocalories or fewer per portion.
With access to strong scientific expertise and the capability to deliver
high value technologies developed globally by Unilever, your Company is
well-placed to leverage the opportunities to drive faster growth on
the back of strong support from R&D as well as brand development
capabilities. At the same time, your Company is equipped to meet the
challenges of increased competition.
8.1 Technology Absorption
Your Company maintains strong and healthy interactions with Unilever
through a well-coordinated management exchange programme, which
includes setting out governing guidelines pertaining to identifying areas of
research, agreeing timelines, resource requirements; scientific research
based on hypothesis testing and experimentation which leads to new /
improved / alternative technologies; supporting the development of
launch-ready product formulation based on research and implementation
of the launch ready product formulations in markets. Your Company
continuously imports technology from Unilever under the Technical
Collaboration Agreement and the same is fully absorbed. The benefits
derived by your Company through technology absorption and R&D have
been detailed earlier in this report.
Your Company also receives continuous support and guidance
from Unilever to drive functional excellence in marketing, supply
management, media buying and IT, among others, which help your
Company to build capabilities, remain competitive and further step-up
its overall business performance. Unilever is committed to ensuring
that the support in terms of new products, innovations, technologies and
services is commensurate with the needs of your Company and enables
it to win in the marketplace.
The details of expenditure on scientific Research and Development at
the Companys in-house R&D facilities eligible for a weighted deduction
under Section 35(2AB) of the Income Tax Act, 1961 for the year ended
31st March, 2017, are as follows:
Capital Expenditure : ` 2 crores
Revenue Expenditure : ` 28 crores
Annual Report 2016-17 Hindustan Unilever Limited
26 Directors Report & MDA
9. ENVIRONMENT, SAFETY, HEALTH AND
ENERGY CONSERVATION
Your Company upholds Safety, Health and Environment as
non-negotiable values. The Companys Safety approach not only encompasses
employees and assets, but also the communities that it operates in. An
environment of safe work, safe behaviour and safe travel is achieved
through implementation and internalisation of your Companys vision of an
injury-free organisation. This is reflected in the continually reducing injury
rates, which came down by over 20% in 2016 as compared to 2015. The absolute
injury rate in 2016 was less than 0.4 injuries per million man-hours worked.
To further improve the safety performance, your Company has introduced
WCM Risk Assessment Tools at specific sites in addition to the existing
BeSafE initiatives across all factories and offices. BeSafE is a behavioural
safety framework, which helps in bringing about a change in the behaviour
patterns and aims to eliminate unsafe acts by improving risk perception of
the employees, be it in factories, offices or homes.
Your Company has a robust system of recording and investigating safety
incidents. All cases of injuries requiring medical intervention are reported
in Unilevers global safety portal and the same is audited by an external
agency. Learnings from safety incidents are cascaded top-down for
mitigation of risks, which can avoid repeat incidents.
Your Company celebrates National Safety Day each year across all sites.
Special programmes are designed by the Corporate Safety Team jointly
with the sites and many of them extend the events to a full Safety Week.
Your Company has a Central Safety, Health and Environment
Sub-Committee, which is led by the Managing Director and
Chief Executive Officer of the Company. In this forum, performances of
specific safety and environment related sub-committees, each of which is
led by a Managing Committee (MC) member, are reviewed. This helps in
bringing newer insights and direction from the top management.
As part of Unilever Sustainable Living Plan (USLP), your Company
strives to grow the business whilst reducing environmental footprint and
increasing positive social impact. Accordingly, your Company has taken
ambitious targets of year-on-year reductions in CO2 emissions (kg per
tonne of production), groundwater abstraction (cubic meter per tonne
of production) and waste generation (kg per tonne of production) in its
operations. Some of the sustainability initiatives undertaken during the
year were:
In order to reduce groundwater usage, factories are working on
direct use of rainwater in plants and processes. In several sites,
make-up water for utilities is taken from rainwater harvested during
monsoons. 2016 saw an impressive increase of 22% in rainwater
re-use in operations over 2015. Water consumption, in cubic meter
per tonne of production, reduced by 53% as compared to 2008
baseline and by 9% over 2015.
In continuation of your Companys successful trials of using vegetable
oil residue as fuel in Orai, similar equipment was installed in
Pondicherry and Bhuj to maximise in-house use of such residue as
source of renewable energy.
Amli and Kandla factories installed solar thermal plants for heating of
process water, utilising the high solar insolation. The project at Amli
has also received partial subsidy from Ministry of New and Renewable
Energy (MNRE). More such installations have been planned.
Biogas plants for utilisation of canteen waste for gas generation were
installed in five factories.
The contribution of renewable energy in total energy consumed for the
year was 28.5%. This was supported by sustained usage of biogenic
fuels across factories. CO2 emissions (kg per tonne of production)
reduced by 49% versus 2008 baseline and by over 13% versus 2015.
Over 23 million units (KWH) were reduced from your Companys
energy footprint during the financial year 2016-17 due to execution of
various capital projects ranging from installation of energy efficient
Hindustan Unilever Limited Annual Report 2016-17
chillers and motors, condensate recoveries, air compressor heat
recoveries, etc. Your Company has made investments totalling
` 17 crores in such projects in the above period.
Total waste generated from the factories reduced by 21.5% in 2016
as compared to 2015. Factories identified newer avenues for re-use
and energy recovery from waste, in addition to the current reduction
and recycling streams, within the purview of statutory guidelines
of waste disposals. Your Company maintained the status of zero
non-hazardous waste to landfill from all factories and offices.
With the continuous evolution of the USLP in a changing landscape, in
January 2017, Unilever announced a commitment to ensure that all of our
plastic packaging will be fully re-usable, recyclable or compostable by 2025.
Your Companys initiatives in the area of Safety and Environment were
recognised through awards from National Safety Council, Shrishti Green
Governance, Karnataka State Pollution Control Board, Confederation of Indian
Industry (CII), GreenTech, Frost & Sullivan, etc.
10. HUMAN RESOURCES
Your Company considers Great Brands and Great People as its biggest
assets. The Human Resource agenda continues to support the business
in achieving sustainable and responsible growth by building the right
capabilities in the organisation. It continues to focus on progressive
employee relations policies, creating an inclusive work culture and a
strong talent pipeline.
Your Company is known as the Leadership Factory, that exports talent
to Unilever and to India Inc., the industry at large. The foundation of all
your Companys learning practices is based on a 70-20-10 approach to
learning. 70% of learning is done through on-the-job training, building
business-linked capabilities to achieve ambitious business targets. 20% of
learning is coaching and 10% of learning is through formal development.
Your Companys learning curriculum is designed to support the entire life
cycle of an employees career.
Driven by the Leaders build Leaders philosophy, your Companys
flagship management trainee programme, the Unilever Future Leaders
Programme (UFLP) has been the training ground for many inspiring
leaders, which provides extensive cross functional experience through
live projects and assignments.
As per the latest Campus Track Business School Survey, conducted by
Nielsen for B-School students, your Company has been chosen as the
preferred employer across all sectors. Your Company has also retained
the Dream Employer status. Your Company is known for having the best
people practices for developing future leaders. The ability to attract the
best talent, provides a competitive edge to the organisation.
A series of programmes like maternity and paternity support, Career by
Choice and location flexibility have helped in driving the Inclusion and
Diversity agenda. Your Company continues to focus on driving inclusion
through building leadership capability and recognising line managers
who provide a simple, flexible and respectful work environment for their
teams.
Your Company has been recognised as one of the Top 10 Best Companies
for Women in India by The Best Companies for Women in India (BCWI)
Study 2016. This award is a recognition of your Companys commitment
towards creating a diverse and inclusive work-culture.
In the beginning of the year, Unilever launched the Connected 4
Growth (C4G) framework which entailed setting up of empowered
Cluster Category Business Teams (CCBTs) with representatives from
different functions. During the year, the C4G framework has been
embedded well in the business through 15 fully functional CCBTs. Your
Company is confident that this framework will help bring more speed and
agility in its operations to compete in the marketplace and strengthen the
consumer connect.
Over the years, the Industrial Relations function of your Company achieved
many milestones by strengthening its base through Institutional Capability

Development Initiatives, Gender Diversity, Digitisation and Community
Development. Your Company drives sustainable growth by leveraging
employee-potential through capability development initiatives in line
with Unilever Production System and by reducing cost and complexity in
Supply Chain units.
Your Company is focussed on building a high-performance culture with
a growth mindset where employees are engaged and empowered to be
the best they can be. Developing and strengthening capabilities of all
employees in your Company has remained an ongoing priority.
Disclosures with respect to the remuneration of Directors and employees
as required under Section 197 of the Act and Rule 5 (1) Companies
(Appointment and Remuneration of Managerial Personnel) Rules,
2014 (Rules) have been appended as Annexure to this report. Details of
employee remuneration as required under provisions of Section 197 of the
Companies Act, 2013 and Rule 5(2) and 5(3) of Rules are available at the
Registered Office of the Company during working hours, 21 days before the
Annual General Meeting and shall be made available to any shareholder
on request. Such details are also available on your Companys website
https://www.hul.co.in/investor-relations/.
11. FINANCE, ACCOUNTS & IT
The agenda for the Finance and Accounts function of your Company
is to assist in driving superior performance of the business, pioneer
thought-leadership and develop future-ready talent in Finance.
During the year, your Company implemented projects to leverage
technology for building business intelligence thereby, enabling growth
and reducing costs through project Livewire and Zero Based Budgeting
(ZBB). Massive simplification of processes led to deploying people on value
partnering through projects like Finance Excellence Team (FET), Amazingly
Simple and One Accounting Centre.
Project Livewire was implemented for end to end business analytics. It
continues to evolve as a pioneering technology enabling your Company
to drive business performance management with speed and agility. The
tool based on bringing together raw data from different sources, delivers
ready-made off-the-shelf analytics in pictorial and graphical form, and
offers actionable insights that help us spot opportunities and challenges
in a faster manner.
To enhance standardisation of accounting processes, improve efficiency in
operations and enhance accounting expertise, three accounting centers are
being formed for consolidating - Sales Accounting, Head Office Accounting
and Factory Accounting.
Your Company invested in a common distribution management system that
has been further upgraded during the year to make it future-ready. The
common mobility solution has also been upgraded. These would enable a
sharper and richer sales execution process in the marketplace.
Particulars 2012-13
Return on Net Worth (%) 94.70
Return on Capital Employed (%) 109.10
Basic EPS (after exceptional items) (`) 17.56
There were no material changes and commitments affecting the financial position of the Company which occurred between the end of the financial year
to which this financial statements relate on the date of this report.
Segment-wise results
During the year, your Company re-organised the businesses into four
categories - Home Care, Personal Care, Foods and Refreshments.
Accordingly, the Management Committee reviews performance of
categories basis new segments.
Your Company identified five business segments, in line with
the Accounting Standard on Segment Reporting (Ind AS-107),
Overview Reports Financial Statements 27
The e-commerce capabilities have been further enhanced. Ability to
manage the digital content of our products and brands and to seamlessly
publish the same to our partners have helped improve the quality of
consumer engagement online. Analytical solutions have been developed
for improved understanding of consumer sentiments and to engage with
them in an agile manner.
Your Company has also invested in rewiring processes and tools to
transform into an amazingly simple organisation. Investments in new
technologies like Financial Closing Cockpit have cut timelines and
improved predictability of the month-end close process. Expanding the SAP
Global Available To Promise (GATP) capability to run the order management
process has helped move the needle on customer service. Your Company
has continued the active engagement with the external environment and is
investing to enhance solutions across the value chain, thereby preparing
itself for the Goods and Services Tax (GST) era. Your Company continues
to drive resilience through targeted remediation of high risk Information
Technology (IT) components, including hardware, database, operating
systems and applications. Alongside the investment in technology, your
Company is also improving its service management processes to prevent
any defects in the IT environment and to enable faster resolution of any
such incidents with minimum business disruption.
Indian Accounting Standards (Ind AS) IFRS Converged
Standards
Your Company, its subsidiaries and joint venture had adopted
Ind AS with effect from 1st April, 2016 pursuant to Ministry of Corporate
Affairs notification dated 16th February, 2015 notifying the Companies
(Indian Accounting Standard) Rules, 2015. Your Company has published
Ind AS Financials for the year ended 31st March 2017 along with
comparable as on 31st March 2016 and Opening Statement of Assets and
Liabilities as on 1st April 2015.
Your Company has proactively shared all four quarters re-stated IND AS
Profit and Loss Statement with Investors along with quarterly results for
June, 2016, for comparison.
Capital Expenditure during the year was at ` 1,372 crores (` 750 crores in
the previous year).
During the year, your Company did not accept any public deposits under
Chapter V of Companies Act, 2013. In terms of the provisions of Investor
Education and Protection Fund (Accounting, Audit, Transfer and Refund)
Rules, 2016 / Investor Education and Protection Fund (Awareness and
Protection of Investors) Rules, 2001, ` 5.43 crores of unpaid / unclaimed
dividends were transferred during the year to the Investor Education and
Protection Fund.
Return on Net Worth, Return on Capital Employed and Earnings Per
Share (EPS) for the last four years and for the year ended 31st March,
2017, are given below:
IGAAP Ind AS
2013-14 2014-15 2015-16 2015-16 2016-17
104.10 99.50 88.70 72.80 76.70
130.20 127.70 128.40 105.80 105.90
17.88 19.95 18.87 19.12 20.75
which comprises: (i) Home Care, (ii) Personal Care, (iii) Foods,
(iv) Refreshments, and (v) Others, including Exports, Infant and Feminine
Care, etc. The audited financial results of these segments are provided
as a part of financial statements.
Details of loans, guarantee or investments made by your Company under
Section 186 of the Companies Act, 2013 during the financial year 2016-17
is appended as an Annexure to this report.
Annual Report 2016-17 Hindustan Unilever Limited
28 Directors Report & MDA
11.1 Risk and Internal Adequacy
Your Company has an elaborate Risk Management procedure, which is
based on three pillars: Business Risk Assessment, Operational Controls
Assessment and Policy Compliance processes. Major risks identified by the
businesses and functions are systematically addressed through mitigating
actions on a continuing basis. The Company has set up a Risk Management
Committee to monitor the risks and their mitigating actions and the key
risks are also discussed at the Audit Committee. Some of the risks identified
by the Risk Management Committee relate to competitive intensity and
cost volatility. The Companys internal control systems are commensurate
with the nature of its business and the size and complexity of its
operations. These are routinely tested and certified by Statutory as well as
Internal Auditors and cover all offices, factories and key business areas.
Significant audit observations and follow up actions thereon are reported
to the Audit Committee. The Audit Committee reviews adequacy and
effectiveness of the Companys internal control environment and monitors
the implementation of audit recommendations, including those relating to
strengthening of the Companys risk management policies and systems.
During the year, your Company started monitoring and reporting Controls
through Livewire - a comprehensive analytics tool that tracks compliance
with internal controls framework established by the management. The
controls dash board allows the management to perform a thematic analysis
of its control health across different processes and activities, time periods
and responsibility centers. This will enable the management to pro-actively
protect value through implementation of a robust control environment.
Your Company manages cash and cash flow processes assiduously,
involving all parts of the business. There was a net cash surplus of
` 1,671 crores (2015-16: ` 2,759 crores), as on 31st March, 2017. The
Companys low debt equity ratio provides ample scope for gearing the
Balance Sheet, should the need arise. Foreign Exchange transactions are
fully covered with strict limits placed on the amount of uncovered exposure,
if any, at any point in time. There are no materially significant uncovered
exchange rate risks in the context of Companys imports and exports.
The Company accounts for mark-to-market gains or losses every quarter
end, in line with the requirements of Accounting Standard 11. The details
of foreign exchange earnings and outgo as required under Section 134 of
the Act and Rule 8(3) of Companies (Accounts) Rules, 2014 are mentioned
below:
(` In crores)
For the year ended For the year ended
31st March, 2017 31st March, 2016
Foreign Exchange earnings 541 559
Foreign Exchange outgo 1,214 1,084
11.2 Mergers, Acquisitions and Divestments
During the year, your Company completed the acquisition of
Indulekha Hair oil. The addition of this brand has further strengthened
our position in the evolving naturals segment. The brand is now fully
integrated into our Personal Care portfolio and is performing well.
Your Company also completed the sale and transfer of its rice exports
business carried out under the brands Gold Seal Indus Valley and
Rozana, to LT foods Middle East DMMC, a group Company of LT Foods
Limited.
Your Company announced its intention to divest its shareholding in
Kimberley Clark Lever Limited (KCLL) to its JV partner Kimberley Clark
Corporation (KCC). The decision to divest from this business is in line with
our strategy focus on core business.
11.3 Goods and Service tax
Goods and Services Tax (GST) is a landmark reform which will have a
lasting impact on the economy and on businesses. Implementation
of a well-designed GST model that applies to the widest possible base
at a low rate can provide significant growth stimulus to the business
Hindustan Unilever Limited Annual Report 2016-17
and contribute to the Prime Ministers mission of Make in India. Your
Company has been preparing for migrating to GST for the past year;
changes across IT systems, Supply Chain and operations have been
made keeping in mind the sweeping changes that GST would bring in.
While there are a few areas that need to be addressed, the Government
has announced an intention to go live on GST on 1st July, 2017 and your
Company will be ready for this transformative reform.
11.4 Scheme of Arrangement
Subsequent to the approval of the shareholders at the Court Convened
Meeting held on 30th June, 2016, to the Scheme of Arrangement for
transfer of the balance of ` 2,187 crores standing to the credit of the
General Reserves to the Profit and Loss Account, your Company had
filed the petition for sanction of the Scheme of Arrangement with the
Honble High Court of Mumbai. Upon the Scheme becoming effective, the
amount so transferred is proposed to be distributed to the shareholders
from time to time, by the Board of Directors, at its sole discretion, in such
manner, quantum and at such time, as the Board of Directors may decide.
Consequent to the notification of certain pending sections of Companies
Act, 2013 including sections related to the Compromise and Arrangements
and National Company Law Tribunal (NCLT), the jurisdiction for
sanctioning the Scheme of Arrangement has been transferred to the
NCLT from High Court of Mumbai. The Scheme is currently pending with
NCLT for sanction.
12. LEGAL, GOVERNANCE AND BRAND
PROTECTION
The Legal function of your Company continues to be a valued partner
in facilitating the business agenda in the areas of claims management,
legislative changes in both emerging and existing regulations, effectively
dealing with unfair competition and ensuring regulatory compliance. The
Legal function also works closely with different stakeholders like Industry
Associations, Regulators, key opinion formers to develop a progressive
regulatory environment in the best interest of all the stakeholders.
The focus of the Legal function has been to partner the business on strategic
issues that present either areas of opportunities or in mitigating risks
besides focussing on core legal work like litigation management, combating
unfair competition to protect Companys brands from counterfeits, look
alike and grey imports. One of the activities that the Legal function has
engaged itself with across the country is in propagating intellectual property
awareness. Your Company believes that it is important to educate students
on intellectual property and build awareness and understanding of the
subject so that students start respecting intellectual property rights from
a young age. Your Company is of the view that the menace of counterfeits
can be effectively addressed if enforcement actions are supplemented with
building awareness amongst the consumers of tomorrow.
12.1 Update on Kodaikanal Soil Remediation
Your Company had informed the shareholders about the long-standing dispute
with the former workers association of the former factory in Kodaikanal.
A Memorandum of Settlement was signed towards the end of the last financial
year with the association bringing to an end this long-standing issue.
The other issue on this matter, which is pending, pertains to commencement
of soil remediation in the premises of the former factory of your Company.
Since this issue first came to light in 2001, your Company has actively
sought to address it in a responsible and transparent manner. During this
year, basis the decision from the Honble Madras High Court, Tamil Nadu
Pollution Control Board (TNPCB) in December 2016 granted permission to
your Company to commence preparatory work and soil remediation on a trial
basis for a period of three months after obtaining applicable local approvals.
The grant of consent by TNPCB was challenged in the Southern Bench of the
National Green Tribunal (NGT), Chennai. Through an interim order, the NGT
has directed that soil remediation should be commenced in accordance with
the consent granted by TNPCB. The Company is committed to conduct soil
remediation at the factory site at the earliest.

12.2 Corporate Governance
A separate report on Corporate Governance is provided together with
a Certificate from the Statutory Auditors of the Company regarding
compliance of conditions of Corporate Governance as stipulated under
Listing Regulations. A Certificate of the CEO and CFO of the Company in
terms of Listing Regulations, inter alia, confirming the correctness of the
financial statements and cash flow statements, adequacy of the internal
control measures and reporting of matters to the Audit Committee, is also
annexed.
The extract of annual return in Form MGT-9 as required under Section 92(3)
of the Act and Rule 12 of the Companies (Management and Administration)
Rules, 2014 is appended as an Annexure to this Report.
12.3 Related Party Transactions
In line with the requirements of the Companies Act, 2013 and
Listing Regulations, your Company has formulated a Policy on Related
Party Transactions which is also available on the Companys website at
https://www.hul.co.in/investor-relations/corporate-governance/. The Policy
intends to ensure that proper reporting, approval and disclosure processes
are in place for all transactions between the Company and Related Parties.
All Related Party Transactions are placed before the Audit Committee
for review and approval. Prior omnibus approval is obtained for
Related Party Transactions on a quarterly basis for transactions which
are of repetitive nature and / or entered in the Ordinary Course of
Business and are at Arms Length. All Related Party Transactions are
subjected to independent review by a reputed accounting firm to establish
compliance with the requirements of Related Party Transactions under the
Companies Act, 2013 and Listing Regulations.
All Related Party Transactions entered during the year were in Ordinary
Course of the Business and at Arms Length basis. No Material Related Party
Transactions, i.e. transactions exceeding 10% of the annual consolidated
turnover as per the last audited financial statements, were entered during
the year by your Company. Accordingly, the disclosure of Related Party
Transactions as required under Section 134(3)(h) of the Companies Act, 2013
in Form AOC-2 is not applicable.
12.4 Prevention of Sexual Harassment at
Workplace
As per the requirement of The Sexual Harassment of Women at Workplace
(Prevention, Prohibition & Redressal) Act, 2013 (Act) and Rules made
thereunder, your Company has constituted Internal Committees (IC). While
maintaining the highest governance norms, the Company has appointed
external independent persons, who have done work in this area and have
requisite experience in handling such matters, as Chairpersons of each of
the Committees. During the year, one complaint with allegations of sexual
harassment was received by the Company and the same was investigated
and resolved as per the provisions of the Act.
In order to build awareness in this area, the Company has been conducting
programmes in the organisation on a continuous basis.
13. SUSTAINABLE LIVING
Your Companys Vision is to accelerate growth in the business, while
reducing environmental footprint and increasing positive social impact.
This vision has been codified in the Unilever Sustainable Living Plan
(USLP), launched in 2010, which is your Companys blueprint for achieving
sustainable growth. By spurring innovation, strengthening Supply Chain,
lowering costs, reducing risks and building trust, sustainability is creating
value for your Company as well as society.
Your Company has made good progress on the three USLP big goals to
be achieved globally: To help more than a billion people take action to
improve their health and well-being, to halve the environmental footprint
of the making and use of the products while growing the business and to
enhance the livelihoods of millions of people while growing the business.
Overview Reports Financial Statements 29
Detailed information on the progress of your Companys USLP initiatives
and CSR activities is available in the Annual Report on CSR and
Business Responsibility Report which is appended as Annexure to this Report.
14. EMPLOYEE STOCK OPTION PLAN (ESOP)
Details of the shares issued under Employee Stock Option Plan (ESOP),
as also the disclosures in compliance with SEBI (Share Based Employee
Benefits) Regulations, 2014 are uploaded on the website of the Company
https://www.hul.co.in/investor-relations/annual-reports/. No employee
has been issued share options during the year, equal to or exceeding one
per cent of the issued capital of the Company at the time of grant.
Pursuant to the approval of the Members at the Annual General Meeting
held on 23rd July, 2012, the Company adopted the 2012 HUL Performance
Share Scheme in place of 2006 HLL Performance Share Scheme. In
accordance with the terms of the Performance Share Plan, employees
are eligible for award of conditional rights to receive equity shares of the
Company at the face value of ` 1/- each. These awards will vest only on
the achievement of certain performance criteria measured over a period of
three years. The Company confirms that the 2012 HUL Performance Share
Scheme complies with the provisions of SEBI (Share Based Employee
Benefits) Regulations, 2014.
Under the said Plan, eligible Managers were given Conditional Performance
Grant of shares of Unilever and the Company in the ratio of 67:33, to mirror
your Companys shareholding, where Unilever held 67% shareholding.
During the year, 203 employees, including Whole-time Directors, were
awarded conditional rights to receive 135,721 Equity Shares at the face value
of ` 1/- each. It comprises conditional grants made to eligible managers
covering performance period from 2016 to 2018 and from 2017 to 2019.
The employees of the Company are eligible for Unilever PLC (the holding
Company) share awards namely, the Management Co-Investment Plan
(MCIP), the Global Performance Share Plan (GPSP) and the SHARES Plan.
The MCIP allows eligible employees to invest up to 100% of their annual
bonus in the shares of the holding Company and to receive a corresponding
award of performance related shares. Under GPSP, eligible employees
receive annual awards of the holding Companys shares. The awards
under MCIP and GPSP plans vests after 3-4 years between 0% and 200%
of grant level, depending on the satisfaction of the performance metrics.
Under the SHARES Plan, eligible employees can invest in the shares of the
holding Company for specified amount and after three years one share is
granted to the employees for every three shares invested subject to the
fulfillment of conditions of the scheme. The holding Company charges the
Company for the grant of shares to the Companys employees based on
the market value of the shares on the exercise date.
15. BOARD OF DIRECTORS AND KEY MANAGERIAL
PERSONNEL
Mr. Dev Bajpai, Executive Director, Legal & Corporate Affairs and
Company Secretary was appointed as an Additional Director on the
Board of the Company with effect from 23rd January, 2017 to hold office
till the conclusion of the next Annual General Meeting of the Company.
Mr. Dev Bajpai has also been appointed as a Whole-time Director on the
Board with effect from 23rd January, 2017, for a period of five years, subject
to approval of Members of your Company at the Annual General Meeting.
As per the provisions of the Companies Act, 2013, Independent Directors
have been appointed for a period of five years and shall not be liable to
retire by rotation. All other Directors, except the Managing Director, will
retire at the ensuing Annual General Meeting and being eligible, offer
themselves for re-election.
The Independent Directors of your Company have given the certificate
of independence to your Company stating that they meet the criteria of
independence as mentioned under Section 149(6) of the Companies Act, 2013.
The details of training and familiarisation programme and Annual Board
Evaluation process for Directors have been provided under the Corporate
Governance Report.
Annual Report 2016-17 Hindustan Unilever Limited
30 Directors Report & MDA
The policy on Directors appointment and remuneration including criteria
for determining qualifications, positive attributes, independence of Director,
and also remuneration for Key Managerial Personnel and other employees,
forms part of the Corporate Governance Report of this Annual Report.
16. MANAGEMENT COMMITTEE
The day-to-day management of the Company is vested with
the Management Committee, which is subjected to the overall
superintendence and control of the Board. The Management
Committee is headed by the Chief Executive Officer and has Functional /
Business Heads as its members.
During the year, your Company re-organised the Foods and Refreshments
(F&R) business into two separate businesses of Foods and Refreshments.
Accordingly, Mr. Sudhir Sitapati, Category Vice President, Refreshments
(South Asia & Africa) was appointed as Executive Director, Refreshments
and member of Management Committee. Ms. Geetu Verma, who
was Executive Director (Foods & Refreshments) was designated as
Executive Director (Foods), responsible for the Foods business of your
Company.
During the year, Mr. Punit Misra, Executive Director, Sales and
Customer Development resigned from the services of the Company.
Mr. Srinandan Sundaram was appointed as Executive Director, Sales and
Customer Development and member of Management Committee of the
Company.
17. AUDITORS
M/s. BSR & Co. LLP were appointed as Statutory Auditors of your
Company at the Annual General Meeting held on 30th June, 2014 for a
term of five consecutive years. As per the provisions of Section 139 of
the Companies Act, 2013, the appointment of Auditors is required to be
ratified by Members at every Annual General Meeting.
The Report given by the Auditors on the financial statements of the Company
is part of the Annual Report. There has been no qualification, reservation,
adverse remark or disclaimer given by the Auditors in their Report.
M/s. RA & Co., Cost Accountants carried out the cost audit for applicable
businesses during the year. The Board of Directors have appointed
M/s. RA & Co., Cost Accountants as Cost Auditors for the financial year
2017-18.
18. OUTLOOK
The global economy continues to remain under pressure from the ongoing
political, policy and economic uncertainties around the world. However, it is
expected that the global growth should stabilise in future.
The Indian GDP growth rate continues to be one of the fastest growing large
economies of the world. Economic growth is expected to further improve on
Hindustan Unilever Limited Annual Report 2016-17
the strengthening consumer sentiment. The medium to long term secular
trends based on urbanisation, rising aspirations, low level of penetration for
most of our categories and improving consumption levels are positive for
the FMCG sector. Your Company, with its brands, talent and investment in
capabilities, is well placed to leverage this opportunity.
The enactment of the GST legislation has been a milestone reform that will
create a win-win environment for all stakeholders and heralds an integrated
and productive economy, and is expected to further boost economic growth.
However, there could be temporary transition challenges during the cut-over.
18.1 Cautionary Statement
Statements in the Annual Report, particularly those which relate to
Management Discussion and Analysis, describing the Companys
objectives, projections, estimates and expectations, may constitute
forward looking statements within the meaning of applicable laws
and regulations. Although the expectations are based on reasonable
assumptions, the actual results might differ.
19. APPRECIATIONS AND ACKNOWLEDGMENTS
Your Directors place on record their deep appreciation to employees at all
levels for their hard work, dedication and commitment. The enthusiasm
and unstinting efforts of the employees have enabled the Company to
remain as industry leaders.
Your Directors would also like to acknowledge the excellent contribution
by Unilever to your Company in providing the latest innovations,
technological improvements and marketing inputs across almost all
categories, in which it operates. This has enabled the Company to provide
higher levels of consumer delight through continuous improvement in
existing products and introduction of new products.
The Board places on record its appreciation for the support and
co-operation your Company has been receiving from its suppliers,
redistribution stockists, retailers, business partners and others
associated with the Company as its trading partners. Your Company
looks upon them as partners in its progress and has shared with them
the rewards of growth. It will be your Companys endeavour to build and
nurture strong links with the trade based on mutuality of benefits, respect
for and co- operation with each other, consistent with consumer interests.
The Directors also take this opportunity to thank all Shareholders,
Clients, Vendors, Banks, Government and Regulatory Authorities and
Stock Exchanges, for their continued support.
On behalf of the Board
Harish Manwani
Chairman
Mumbai, 17th May, 2017 (DIN : 00045160)
 Overview Reports Financial Statements 31

Annexure to the Directors Report

Statement of Disclosure of Remuneration under Section 197 of Companies Act, 2013
and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014
i Ratio of the remuneration of each Executive Director to the median remuneration of the Employees of the Company for the financial year 2016-17,
the percentage increase in remuneration of Chief Executive Officer, Chief Financial Officer and other Executive Director and Company Secretary during
the financial year2016-17.

S.No Name of Director/KMP Designation Ratio of remuneration of Percentage

each Director to median increase in
remuneration of Employees Remuneration
1 Sanjiv Mehta Managing Director & CEO 138.44 0.0%*
2 P. B. Balaji Executive Director, Finance & IT and CFO 81.36 0.0%*
3 Pradeep Banerjee Executive Director, Supply Chain 46.48 8.0%
4 Dev Bajpai Executive Director, Legal and Corporate Affairs 45.93 8.0%
and Company Secretary
*Governed under remuneration structure, impacted by currency fluctuations.
ii The percentage increase in the median remuneration of Employees for the financial year was 3.42%.
iii The Company has 5976** permanent Employees on the rolls of Company as on 31st March,2017.
iv Average percentage increase made in the salaries of Employees other than the managerial personnel in the financial year was 5.57% whereas the
increase in the managerial remuneration was 3.1%. The average increases every year is an outcome of Companys market competitiveness as against
its peer group companies. In keeping with our reward philosophy and benchmarking results, the increases this year reflect the market practice.
v It is hereby affirmed that the remuneration paid during the year is as per the Remuneration Policy of the Company.
Note:
a) TheNon-Executive Directors of the Company are entitled for sitting fee and commission as per the statutory provisions and within the limits
approved by the shareholders. The details of remuneration of Non-Executive Directors are provided in the Corporate Governance Report and
is governed by the Differential Remuneration Policy, as detailed in the said report. The ratio of remuneration and percentage increase for
Non-Executive Directors Remuneration is therefore not considered for the purpose above.
b) Percentage increase in remuneration indicates annual target total compensation increases, as approved by the Nomination and Remuneration
Committee of the Company during the financial year 2016-17.
c) Employees for the purpose above includes all employees excluding employees governed under collective bargaining.
** Includes employees working for Hindustan Unilever Limited, legal entity only. Last year reported number included the employees working with subsidiaries and group
companies as well.

Particulars of Loans, Guarantees or Investments

Amount outstanding as at 31st March, 2017
(` crores)
Particulars Amount
Loans given 198
Guarantee given 8
Investments made 3,779

Loan, Guarantee and Investments made during the financial year 2016-17
Name of Entity Relation Amount Particulars of loan, Purpose for which the loans,
(` crores) guarantee and guarantee and investments are
investments proposed to be utilized
Lakme Lever Private Limited Subsidiary 76 Loan Business purpose
Ponds Exports Limited Subsidiary 8 Loan Business purpose
Kimberly Clark Lever Private Limited Joint Venture - Investments Business purpose
MutualFunds# - 864 Investments Cash Management
#
For details refer to Note 7 of Notes to the financial statements
On behalf of the Board
 Harish Manwani
Chairman
Mumbai, 17th May, 2017 (DIN : 00045160)

Annual Report 2016-17 Hindustan Unilever Limited

32 Directors Report & MDA

Annexure to the Directors Report

Extract of Annual Return

Form No. MGT-9

(As on the Financial Year ended on 31st March, 2017)
[Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies
(Management and Administration) Rules, 2014]

I. REGISTRATION AND OTHER DETAILS:

i) CIN : L15140MH1933PLC002030

ii) Registration Date : 17th October, 1933

iii) Name of the Company : Hindustan Unilever Limited

iv) Category / Sub-Category of the Company : Public Company / Subsidiary of Foreign Company limited by shares

v) Address of the Registered Office and contact details : Unilever House, B. D. Sawant Marg, Chakala, Andheri (East),
Mumbai 400 099. Tel : 022 39832285/39832452
E-mail : levercare.shareholder@unilever.com
Website : www. hul.co.in

vi) Whether listed Company : Yes

vii) Name, Address and contact details of Registrar and
Transfer Agent, if any :
: M/s Karvy Computershare Private Limited,
Unit : Hindustan Unilever Limited, Karvy Selenium Tower B, Plot 31-32,
Gachibowli Financial District, Nanakramguda, Hyderabad - 500 032
Phone : 040 - 67161500, 33211000
Fax : 040 - 23420814, 23001153
Toll Free no.: 1800-345-4001
E-mail : einward.ris@karvy.com
Website : www.karvy.com

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY (Activities contributing 10% or more of the turnover)
Sl. Name and Description of Products NIC Code of the Product % to total turnover of the Company
No.

1 Soaps 20231 30.47%

2 Detergents 20233 18.72%

3 Cosmetics & Toiletries 20237 16.40%

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 33

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES

Sl No. Name and address of the Company CIN/GLN % of shares Held

Holding Company [Section 2(46)]

1 Unilever PLC N.A. 51.49

Port Sunlight, Wirral, Merseyside CH624ZD

2 Brooke Bond Group Limited# N.A. 4.93

3 Unilever Overseas Holdings AG N.A. 3.18

Hinterbergstrasse 28, Postfach 5364, 6330 Cham 2, Switzerland

4 Unilever UK & CN Holdings Limited# N.A. 2.78

5 Brooke Bond South India Estates Limited# N.A. 2.43

6 Brooke Bond Assam Estates Limited# N.A. 1.52

7 Unilever Overseas Holdings B V# N.A. 0.87

Subsidiary Companies [Section 2(87)(ii)]

1 Unilever India Exports Limited* U51900MH1963PLC012667 100

2 Ponds Exports Limited* U24246MH1981PLC261125 90

3 Lakme Lever Private Limited U24247MH2008PTC188539 100

Shree Niwas House, 1st Floor, H. Somani Marg, Fort,
Mumbai - 400 001

4 Unilever Nepal Limited N.A. 80

Basamadi V. D. C. 5, P.O. Box-11, Hetauda,
Dist. Makwanpur, Nepal

5 Daverashola Estates Private Limited* U15200MH2004PTC149035 100

6 Jamnagar Properties Private Limited* U70101MH2006PTC165144 100

7 Levers Associated Trust Limited* U74999MH1946PLC005403 100

8 Levindra Trust Limited* U67120MH1946PLC005402 100

9 Hindlever Trust Limited* U65990MH1958PLC011060 100

10 Hindustan Unilever Foundation* U93090MH2010NPL201468 76

11 Bhavishya Alliance Child Nutrition Initiatives* U93090MH2010NPL208544 100

Associate Company [Section 2(6)]

1 Kimberly-Clark Lever Private Limited U74999PN1994PTC081290 50

Gat No.934-937, Villagesanaswadi, Taluka - Shirur,
Pune 412 208
#
Registered Office at Unilever House, 100 Victoria, Embankment, London EC4Y0DY
*Registered Office at Unilever House, B. D. Sawant Marg, Chakala, Andheri (East), Mumbai - 400 099

Annual Report 2016-17 Hindustan Unilever Limited

34 Directors Report & MDA

IV. SHARE HOLDING PATTERN (EQUITY SHARE CAPITAL BREAKUP AS PERCENTAGE OF TOTAL EQUITY)
i) Category-wise Shareholding
Category of Shareholders No. of Shares held at the beginning of the year No. of Shares held at the end of the year % Change
during
Demat Physical Total % of Demat Physical Total % of
the year
Total Total
Shares Shares
A. Promoters
1. Indian - - - - - - - - -
2. Foreign
- Bodies Corporates 1,45,44,12,858 - 1,45,44,12,858 67.21 1,45,44,12,858 - 1,45,44,12,858 67.20 -0.01
Total Promoter Shareholding (A) 1,45,44,12,858 - 1,45,44,12,858 67.21 1,45,44,12,858 - 1,45,44,12,858 67.20 -0.01
B. Public Shareholding
1. Institutions
- Mutual Funds 1,88,16,666 49,284 1,88,65,950 0.87 3,83,86,030 49,284 3,84,35,314 1.78 0.91
- Banks / Financial Institutions 67,13,212 1,30,990 68,44,202 0.32 69,90,335 1,28,710 71,19,045 0.33 0.01
- State Government - 20 20 - - 20 20 - -
- Insurance Companies 7,81,41,008 9,500 7,81,50,508 3.61 7,68,50,946 9,500 7,68,60,446 3.55 -0.06
- Foreign Institutional Investors 30,71,60,539 37,450 30,71,97,989 14.20 28,70,05,513 37,450 28,70,42,963 13.26 -0.94
Sub-total (B)(1) 41,08,31,425 2,27,244 41,10,58,669 19.00 40,92,32,824 2,24,964 40,94,57,788 18.92 -0.08
2. Non-Institutions
- Bodies Corporates
i) Indian 2,22,19,489 4,79,384 2,26,98,873 1.05 2,73,12,657 4,36,164 2,77,48,821 1.28 0.23
ii) Overseas 3,600 - 3,600 - 3,600 - 3,600 - -
- Individuals
i) Individual shareholders holding 20,96,63,866 4,86,18,740 25,82,82,606 11.94 20,72,49,418 4,57,70,440 25,30,19,858 11.69 -0.25
nominal share capital upto ` 1 lakh

ii) Individual shareholders holding 43,10,091 7,10,350 50,20,441 0.23 40,29,793 7,10,350 47,40,143 0.22 -0.01
nominal share capital in excess of ` 1
lakh
- Others
i) Trust 30,82,951 - 30,82,951 0.14 47,41,677 - 47,41,677 0.22 0.08
ii) Non Resident Indians 78,22,137 4,08,850 82,30,987 0.38 79,47,612 4,14,170 83,61,782 0.38 -
iii)
Foreign Nationals 13,995 3,120 17,115 - 23,689 3,120 26,809 - -
iv)
Foreign Banks 29,524 - 29,524 - 7,720 - 7,720 - -
v) Directors & their Relatives 78,182 - 78,182 - 1,20,783 - 1,20,783 0.01 0.01
vi)
Clearing Members 10,21,165 - 10,21,165 0.05 17,07,800 - 17,07,800 0.08 0.03
vii) Qualified Foreign Investor - - - - - - - - -
Sub-total (B)(2):- 24,82,45,000 5,02,20,444 29,84,65,444 13.79 25,31,44,749 4,73,34,244 30,04,78,993 13.88 0.09
Total Public Shareholding 65,90,76,425 5,04,47,688 70,95,24,113 32.79 66,23,77,573 4,75,59,208 70,99,36,781 32.80 0.01
(B)=(B)(1) +(B)(2)
C. Shares held by Custodian for GDRs & ADRs - - - - - - - - -

Grand Total (A+B+C) 211,34,89,283 5,04,47,688 2,16,39,36,971 100.00 211,67,90,431 4,75,59,208 216,43,49,639 100.00 -

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 35

ii) Shareholding of Promoters

Sl. Shareholders Name Shareholding at the beginning of the year Shareholding at the end of the year % change in
No. the
No. of Shares % of % of Shares No. of Shares % of Shares % of Shares
shareholding
Shares Pledged/ total of the Pledged/
during the
total of the Encumbered to Company E ncumbered to
year
Company total shares total shares
1 Unilever PLC 1,11,43,70,148 51.50 - 1,11,43,70,148 51.49 - -0.01
2 Brooke Bond Group Limited 10,67,39,460 4.93 - 10,67,39,460 4.93 - -
3 Unilever Overseas Holdings AG 6,87,84,320 3.18 - 6,87,84,320 3.18 - -
4 Unilever UK & CN Holdings Limited 6,00,86,250 2.78 - 6,00,86,250 2.78 - -
5 Brooke Bond South India Estates Limited 5,27,47,200 2.43 - 5,27,47,200 2.43 - -
6 Brooke Bond Assam Estates Limited 3,28,20,480 1.52 - 3,28,20,480 1.52 - -
7 Unilever Overseas Holdings B V 1,88,65,000 0.87 - 1,88,65,000 0.87 - -
Total 1,45,44,12,858 67.21 - 1,45,44,12,858 67.20 - -0.01

iii) Change in Promoters Shareholding

There are no changes in the Promoters shareholding during the Financial Year 2016-17. The percentage change in the Promoters holding is due to
increase in the paid up share capital of the Company

iv) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs)
as on 31st March, 2017:
Sl. Name of Shareholders Shareholding Cumulative Shareholding during the year
No.
No. of Shares % of total shares No. of Shares % of total shares of
of the Company the Company
1 Life Insurance Corporation of India
At the beginning of the year 3,34,45,454 1.55 3,34,45,454 1.55
Bought during the year 24,45,253 0.11 3,58,90,707 1.66
Sold during the year - - 3,58,90,707 1.66
At the end of the year 3,58,90,707 1.66 3,58,90,707 1.66
2 The New India Assurance Company limited
At the beginning of the year 1,58,21,306 0.73 1,58,21,306 0.73
Bought during the year - - 1,58,21,306 0.73
Sold during the year 18,54,332 0.08 1,39,66,974 0.65
At the end of the year 1,39,66,974 0.65 1,39,66,974 0.65
3 Vanguard Emerging Markets Stock Index Fund A
At the beginning of the year 1,09,51,632 0.51 1,09,51,632 0.51
Bought during the year 12,39,402 0.06 1,21,91,034 0.57
Sold during the year 7,83,518 0.04 1,14,07,516 0.53
At the end of the year 1,14,07,516 0.53 1,14,07,516 0.53
4 Franklin Templeton Investment Funds
At the beginning of the year 67,63,675 0.31 67,63,675 0.31
Bought during the year 39,89,841 0.19 1,07,53,516 0.50
Sold during the year 55,932 0.01 1,06,97,584 0.49
At the end of the year 1,06,97,584 0.49 1,06,97,584 0.49
5 General Insurance Corporation of India
At the beginning of the year 1,04,35,940 0.48 1,04,35,940 0.48
Bought during the year 80,000 0.01 1,05,15,940 0.49
Sold during the year 3,30,000 0.02 1,01,85,940 0.47
At the end of the year 1,01,85,940 0.47 1,01,85,940 0.47

Annual Report 2016-17 Hindustan Unilever Limited

36 Directors Report & MDA

Sl. Name of Shareholders Shareholding Cumulative Shareholding during the year

No.
No. of Shares % of total shares No. of Shares % of total shares of
of the Company the Company
6 Aberdeen Global Indian Equity Limited
At the beginning of the year 1,04,99,066 0.49 1,04,99,066 0.49
Bought during the year - - 1,04,99,066 0.49
Sold during the year 7,89,000 0.04 97,10,066 0.45
At the end of the year 97,10,066 0.45 97,10,066 0.45
7 Aberdeen Emerging Markets Fund
At the beginning of the year 82,15,443 0.38 82,15,443 0.38
Bought during the year 10,00,000 0.05 92,15,443 0.43
Sold during the year - - 92,15,443 0.43
At the end of the year 92,15,443 0.43 92,15,443 0.43
8 Vanguard Total International Stock Index Fund
At the beginning of the year 73,81,040 0.34 73,81,040 0.34
Bought during the year 12,77,831 0.06 86,58,871 0.40
Sold during the year 10,716 - 86,48,155 0.40
At the end of the year 86,48,155 0.40 86,48,155 0.40
9 Ishares India Index Mauritius Company
At the beginning of the year 89,12,084 0.41 89,12,084 0.41
Bought during the year 13,04,896 0.06 1,02,16,980 0.47
Sold during the year 23,58,378 0.11 78,58,602 0.36
At the end of the year 78,58,602 0.36 78,58,602 0.36
10 Government of Singapore
At the beginning of the year 1,30,39,578 0.60 1,30,39,578 0.60
Bought during the year 4,69,772 0.02 1,35,09,350 0.62
Sold during the year -56,91,651 -0.26 78,17,699 0.36
At the end of the year 78,17,699 0.36 78,17,699 0.36
Notes:
The above information is based on the weekly beneficiary position received from Depositories.
The date wise increase or decrease in shareholding of the top ten shareholders is available on the website of the Company www.hul.co.in

v) Shareholding of Directors and Key Managerial Personnel:

Sl. Name of Directors / KMP Shareholding at the beginning of the year Cumulative Shareholding during the year
No No. of shares % of total shares No. of shares % of total shares
of the Company of the Company
1 Mr. Harish Manwani
At the beginning of the year 22,130 - 22,130 -
Bought during the year - - 22,130 -
Sold during the year - - 22,130 -
At the end of the year 22,130 - 22,130 -
2 Mr. P. B. Balaji
At the beginning of the year 12,406 - 12,406 -
Bought during the year - - 12,406 -
Sold during the year - - 12,406 -
At the end of the year 12,406 - 12,406 -
3 Mr. Pradeep Banerjee
At the beginning of the year 43,611 - 43,611 -
Bought during the year 9,275* - 52,886 -
Sold during the year - - 52,886 -
At the end of the year 52,886 - 52,886 -
*Shares allotted under ESOP
Hindustan Unilever Limited Annual Report 2016-17
 Overview Reports Financial Statements 37

Sl. Name of Directors / KMP Shareholding at the beginning of the year Cumulative Shareholding during the year
No No. of shares % of total shares No. of shares % of total shares
of the Company of the Company
4 Mr. S. Ramadorai
At the beginning of the year 35 - 35 -
Bought during the year - - 35 -
Sold during the year - - 35 -
At the end of the year 35 - 35 -
5 Mr. Dev Bajpai
At the beginning of the year 27,261 - 27,261 -
Bought during the year 6,065* - 33,326 -
Sold during the year - - - -
At the end of the year 33,326 - 33,326 -
Note:
Mr. Sanjiv Mehta, Mr. Aditya Narayan, Mr. O. P. Bhatt, Dr. Sanjiv Misra and Mr. Kalpana Morparia did not hold any shares of the Company during the
financial year 2016-17.
*Shares allotted under ESOP

V. INDEBTEDNESS
The Company had no indebtedness with respect to secured or Unsecured Loans or Deposits during the financial year 2016-17

VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A. Remuneration to Managing Director, Whole-time Directors and Key Managerial Personnel:

(` lakhs)
Sl. Particulars of Remuneration Name of MD / WTD / KMP Total
No. Sanjiv Mehta P. B. Balaji Pradeep Banerjee Dev Bajpai* Amount

Managing Director Executive Director, Executive Director, Executive Director,

& Chief Executive Finance and IT & Supply Chain Legal and Corporate
Officer Chief Financial Affairs & Company
Officer Secretary
1. Gross salary
(a) Salary as per provisions contained 752 613 187 178 1730
in section 17(1) of the Income-tax
Act, 1961
(b) Value of perquisites u/s 17(2) 103 1 2 2 108
Income-tax Act, 1961
(c) Profits in lieu of salary under section 227 94 84 78 483
17(3) Income-tax Act, 1961
2. Stock Option 313 89 166 179 747
3. Sweat Equity - - - - -
4. Commission - - - - -
Others (Contribution to PF & 25 36 36 32 129
Superannuation)
Total (A) 1420 833 475 469 3197
Ceiling as per the Act ` 61,160 lakhs (being 10% of Net Profits of the Company calculated as per Section 198 of the
Companies Act, 2013)
*Mr. Dev Bajpai is the Company Secretary, Key Managerial Personnel of the Company and was appointed as Whole-time Director w.e.f. 23rd January, 2017.

Annual Report 2016-17 Hindustan Unilever Limited

38 Directors Report & MDA

B. Remuneration to other Directors:

(` lakhs)
Particulars of Remuneration Name of other Directors
Total
Chairman* Independent Directors
Amount
Harish Manwani Aditya Narayan S. Ramadorai O.P. Bhatt Sanjiv Misra Kalpana Morparia
Fee for attending Board /Committee - 5.40 4.50 6.00 5.40 4.20 25.50
meetings
Commission# 62.00 24.00 22.69 26.00 23.00 22.00 179.69
Total (B) 62.00 29.40 27.19 32.00 28.40 26.20 205.19
Ceiling as per the Act ` 6,116 lakhs (being 1% of Net Profits of the Company calculated as per Section 198 of the Companies Act, 2013)
Total Managerial Remuneration = (A+B) 3402.19
Overall Ceiling as per the Act ` 67,276 lakhs (being 11% of Net Profits of the Company calculated as per Section 198 of the Companies Act, 2013)
*Non-Executive Non-Independent Director
#
The commission for the Financial Year ended 31st March, 2017 will be paid after adoption of accounts by the shareholders at the AGM to be held on 30th June, 2017

VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:

There were no penalties / punishment / compounding of offences for breach of any section of Companies Act against the Company or its Directors or
other officers in default, if any, during the year.
 On behalf of the Board

 Harish Manwani
Chairman
Mumbai, 17th May, 2017 (DIN : 00045160)

Hindustan Unilever Limited Annual Report 2016-17


Annexure to the Directors Report
Annual Report on Corporate Social Responsibility
[Pursuant to Companies (Corporate Social Responsibility Policy) Rules, 2014]
1. Brief outline of the Companys CSR Policy,
including overview of projects / programmes
undertaken:
Your Company has a simple but clear purpose to make sustainable
living commonplace. This purpose inspires your Companys vision to
accelerate growth in the business, while reducing its environmental
footprint and increasing its positive social impact. Your Companys
commitment to sustainable living is not only helping to drive strong
business growth but also helping to enhance equity and preference
for its brands with consumers.
Your Company believes that in the long term, this is the best way for
business to grow sustainably. That is why Unilever Sustainable Living
Plan (USLP) (Link - http://www.hul.co.in/sustainable-living/) is at
the heart of your Companys business model. The USLP has three
global goals namely: (i) help more than a billion people take action
to improve their health and well-being; (ii) halve the environmental
footprint of the making and use of products; and (iii) enhance the
livelihoods of millions of people while growing the business. These
goals also contribute to and are covered by activities listed in the
Schedule VII of Section 135 of the Companies Act, 2013. USLP
commits to a value chain approach which is integrated across your
Companys brands and operations. Your Company also supports
the United Nations Sustainable Development Goals through its
initiatives.
The Corporate Social Responsibility (CSR) Policy of the Company, as
approved by the Board of Directors, is available on the Companys
website at www.hul.co.in
A brief overview of your Companys projects is given below:
Improving Health and Well-being
Handwashing Behaviour Change Programme: Every year, in India,
1.3 million children die before they reach the age of five, many
due to preventable infections. Handwashing with soap has been
cited as one of the most cost-effective solutions to address this
challenge1. A review of several studies show that the simple act of
handwashing in institutions, such as primary schools and day care
centres, reduces the incidence of diarrhoeal diseases by an average
of 30 per cent. Lifebuoy handwashing behaviour change initiatives
of your Company, helps in promoting the benefits of handwashing
with soap at key times during the day and encouraging people to
sustain good handwashing behaviours. Till date, your Company has
reached over 63 million people in India.
Safe Drinking Water: In the developing world, 80% diseases are
water-related. The World Health Organization states that the provision
of safe water alone will reduce diarrhoeal diseases by up to 50%. Your
Companys Pureit water purifiers have been working towards making
safe water accessible and affordable to millions. Pureits most affordable
range of purifiers provide safe drinking water at a running cost of just
30 paisa per litre without the hassles of boiling, or need of electricity
or a continuous tap water supply. In India, Pureit has provided over
74 billion litres of safe drinking water till date.
Domex Toilet Academy (DTA): Domex Toilet Academy (DTA)
is a unique market-based entrepreneurial model launched by
your Company in 2014. Currently operational in Bihar, the DTA
programme trains entrepreneurs and masons to help build and
maintain toilets; provides access to micro-financing and creates
demand for sanitation in low-income households. Since its
inception, the DTA has trained more than 500 micro-entrepreneurs.
http://unicef.in/story/129/Fast-Facts-And-Figures-About-Handwashing
1
Overview Reports Financial Statements 39
To date, over a lakh of toilets have been built, benefiting over six
lakh people.
Swachh Aadat Swachh Bharat: Your Comapanys Swachh Aadat,
Swachh Bharat (SASB) programme is in line with Government of
Indias Swachh Bharat Abhiyan to promote good health and hygiene
practices. In 2016, the programme continued to stress upon the
need to adopt three simple good habits (Swachh Aadat)
i. washing hands five times a day,
ii. using a toilet for defecation and keeping it clean, and
ii. adopting safe drinking water practices.
Swachhata Doot (Messenger of Cleanliness): This is a mobile-led
rural behaviour change communication model, wherein the
factory workers become agents of behaviour change in their
villages. They share two-minute audio stories on clean habits
through their mobile phones. They reach out to school children,
parents and community members thereby positively impacting
rural communities. Your Company has successfully reached
over 30 lakh people since inception through this programme.
Suvidha, the Community Hygiene Centre: Your Company has built
a first-of-its-kind urban water, hygiene and sanitation community
centre named Suvidha in Azad Nagar, Ghatkopar, one of the
largest slums in Mumbai. The community centre provides water,
sanitation, handwashing, shower facilities and laundry services at
significantly lower costs than market rates. Suvidha uses circular
economy principles to reduce water use. Fresh water is first
used for brushing teeth, bathing, handwashing and laundry. The
waste water from these activities becomes the input for flushing
toilets. Your Company built the Centre in 2016 with its partners,
the Municipal Corporation of Greater Mumbai and Pratha Samajik
Sanstha, a community-based organisation. The project was
devised, developed and built in close consultation with the local
community. The community centre caters to over 1,500 people.
Asha Daan: Asha Daan is a home in Mumbai for abandoned
and differently-abled children, the HIV-positive people and the
destitute. Since the inception of Asha Daan in 1976, your Company
has been looking after the maintenance of the premises. Your
Company takes care of over 400 infants, destitute men and
women and HIV-positive patients at Asha Daan.
Sanjeevani: Your Company runs a free mobile medical
service camp Sanjeevani for the local community near
Doom Dooma factory in Assam. There are two mobile vans
dedicated to the project, each vehicle has one male and one
female doctor, two nurses, a medical attendant and a driver. The
vans are equipped with basic kits such as diagnostic kit, blood
pressure measuring unit, medicines and a mobile stretcher. More
than 3,10,000 patients have been treated in these service camps
since its inception in 2003. In 2016 alone, nearly 20,000 patients
were treated through this programme.
Reducing Environmental Impact
Water Conservation Projects: According to estimates, by 2030
the supply of water in India will be significantly lower than the
demand. India has around 18% of the worlds population but only
4% of water resources are usable fresh water. To understand and
contribute in addressing this challenge, your Company set up
Hindustan Unilever Foundation (HUF) in 2010, a not-for-profit
Company that acts as a vehicle to anchor water management demand
and supply related community development initiatives. HUF supports
national priorities for socio-economic development through its Water
for Public Good programme, with specific focus on contributing to the
water discourse and practice through a partnered approach.
Annual Report 2016-17 Hindustan Unilever Limited
40 Directors Report & MDA
HUF is creating capacities to manage water through significant
social investments. HUF operates the Water for Public Good
programme, with specific focus on water associated livelihoods
in 54 districts across India. HUF works with various implementing
partners including NGOs and encourages them to tie up
various co-funding arrangements. HUF also supports several
knowledge initiatives in this area. Through its projects, HUF has
created a collective and cumulative water potential of more than
300 billion litres across India, generated more than six lakh tonnes
of agriculture and biomass production and has mobilised
employment of more than 37 lakh person days so far.
Sustainable Sourcing of Tea: Your Company has a clear roadmap
to achieve the bold commitment to source 100% of agricultural
raw materials sustainably by 2020. As part of this, your Company
has partnered with Solidaridad for sustainable sourcing of tea. The
programme aims to move the Indian tea industry producers into
adopting a sustainability code which shall promote sustainable
agricultural practices, improve productivity and reduce costs
ensuring future security of tea supply in India and also protect
the ecosystem (soil, water and bio-diversity) whilst improving the
quality of life for producers and workers.
Enhancing Livelihoods
Improving livelihoods of smallholder farmers: Your Company has
been associated with a number of smallholder farmers through its
supplier partners, training them on good agricultural practices like
drip irrigation, nutrient management, pest and disease management
to improve their livelihood. A total of 10,000 smallholder gherkin
farmers in southern India have benefitted from Unilevers
innovative Responsible Farming Programme. The aim is to increase
productivity, develop best practices and improve livelihoods.
Smallholder farmers growing tomatoes for your Company have
also benefitted from similar training initiatives. Till date, your
Company has reached out to over 8,000 smallholder farmers who
grew tomatoes on more than 11,000 acres of land. In 2016 alone,
your Company reached out to 5,000 smallholder farmers who
grew tomatoes on 7,000 acres of land.
Project Shakti: Project Shakti is your Companys initiative to
financially empower rural women and create livelihood opportunities
for them. Project Shakti provides livelihood-enhancing opportunities
to women micro-entrepreneurs across India.
The Shakti Ammas are given training for familiarisation with your
Companys products and basic tenets of distribution management.
Your Company has a team of Rural Sales Promoters (RSPs) who
coach and help Shakti Ammas in managing their business. This
includes help in business basics and troubleshooting as well as
coaching in softer skills of negotiation and communication which
enable them to run their business effectively.
In 2010, your Company extended Project Shakti to include
Shaktimaans. Shaktimaans are typically the husbands or brothers
of Shakti Ammas. They sell products on bicycle in surrounding
villages, covering a larger area than Shakti Ammas can cover on
foot. Today, Project Shakti has over 72,000 micro-entrepreneurs
supported by 48,000 Shaktimaans.
Fair & Lovely Foundation: The Foundation identifies academically
exceptional girls from financially challenged backgrounds
and offers scholarships to deserving candidates. To maintain
integrity and fairness, the selection is done by a panel of eminent
personalities from diverse fields. During the year, the Foundation
awarded scholarships to over 200 deserving girl students. Till date,
over 1,400 girl students have been awarded scholarships.
Fair & Lovely Foundation has partenered with edX.org, a
non-profit Massive Open Oline Course Platform founded by
Harvard University and MIT, NIIT and English Edge to launch a
mobile education programme for women. This partnership will
enable your Company, via Fair & Lovely Foundation, to leverage
Hindustan Unilever Limited Annual Report 2016-17
edXs online courses to provide a holistic, career guidance-driven
learning to enable higher employability for young women.
Prabhat: Prabhat is a USLP-linked programme which contributes
to the development of local communities around your Companys
manufacturing locations. The key areas of Prabhat programme
are - Enhancing Livelihoods, Water Conservation and Health and
Hygiene. From its launch in December 2013 in eight locations,
project Prabhat is now live in over 30 locations across the country
and has directly impacted over six and a half lakh people.
Rin Career Ready Academy: Rin Career Ready Academy aims to
inspire, educate and equip the youth from modest backgrounds with
skills in English training, office dressing and interviewing. In 2016,
your Company re-launched the academy with two key new initiatives:
Introduction of the Tele-Conferencing module where students can
speak to a teacher instead of an automated voice and second is a
web course available on www.rin.in. So far, over three and half lakh
people have been reached through this programme. In 2016 alone,
nearly two lakh people benefited from this programme.
Ankur: Ankur was set up in 1993 as a centre by your Companys
Plantations Division for special education for differently-abled
children at Doom Dooma in Assam. Ankur provided educational,
vocational and recreational activities to 33 differently-abled children.
Others:
Relief Funds - Donation: Your Company has always been at
the forefront in responding to the call for national duty and has
contributed generous amounts for upliftment of communities hit
by natural disasters.
Your Companys work over the last several years has paved the way
for setting out clear targets that the Company is committed to meet.
However, to scale up your Companys initiatives, partnerships are
crucial to make a meaningful difference. Your Company is working
in partnership with Governments, NGOs, suppliers and others to
help forge alliances and address big societal challenges.
Your Company has shared progress on the sustainability initiatives
and partnerships in the Business Responsibility Report in line with
the key principles enunciated in the National Voluntary Guidelines
on Social, Environmental and Economic Responsibilities of
Business framed by the Ministry of Corporate Affairs. This year the
Business Responsibility Report is integrated with the Annual Report.
2. Composition of the CSR Committee
Please refer to the Corporate Governance Report for the composition
of CSR Committee.
3. Details of CSR Spend
(` in Lakhs)
Average Net Profit of the Company for last 3 financial 5,08,567
years:
Prescribed CSR Expenditure: 10,171
Details of CSR spent during the financial year 2016-17
a) Total amount to be spent for the financial year (2% of the 10,171
Average Net Profit for last 3 financial years):
b) Total amount spent for the financial year: 10,388
c) Amount unspent, if any: Nil
 Overview Reports Financial Statements 41

d) Manner in which the amount was spent during the financial year is detailed below.
(` in Lakhs)
Sr. CSR project/activity identified Relevant Projects/ Amount Amount spent on the Cumulative Amount spent:
No. Section of Programmes outlay project/programs expenditure Direct / through
Schedule VII Coverage (budget) up to 31st implementing
in which the Direct Overheads March, 2017 agency
Project is expenditure
covered (Note 1)
1 Project Shakti (ii) PAN India 4,413 4,413 0 4,413 Direct
2 Swachh Aadat Swachh Bharat (i) PAN India 2,742 2,742 0 2,742 Direct
3 Water Conservation Projects (iv) PAN India 2,162 1,869 293 2,162 Implementing
Agencies (Multiple
NGOs) (Note 2 [i])
4 Ashadaan (iii) Mumbai 196 196 0 196 Implementing
Agencies
(Missionaries of
Charity)
5 Project Prabhat (x) PAN India 654 639 15 654 Implementing
Agencies (Note 2 [ii])
6 Sanjivani (i) Assam 67 67 0 67 Direct
7 Ankur (iii) Assam 28 28 0 28 Direct
8 Solidaridad - Sustainability (iv) PAN India 126 126 0 126 Implementing
(Tea Procurement) Agency (SREC)
TOTAL 10,388 10,080 308 10,388
Note 1:
(i) eradicating hunger, poverty and malnutrition; promoting health care including preventive health care and sanitation including contribution to the
Swachh Bharat Kosh set up by the Central Government for the promotion of sanitation and making available safe drinking water;
(ii) promoting education, including special education and employment enhancing vocational skills especially among children, women, elderly and the
differently abled and livelihood enhancement projects;
(iii) promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centers
and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups;
(iv) ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural
resources and maintaining quality of soil, air and water including contribution to the Clean Ganga Fund set up by the Central Government for
rejuvenation of river Ganga;
(x) Rural development projects.

Note 2 [i]:
Foundation for Ecological Society, Watershed Organisation Trust, Peoples 4. CSR Committee Responsibility Statement
Action for National Integration, Samuha, Sahjeevan, Samaj Pragati
Sahayog, Dhan Foundation, Integrated Rural Development Trust and The CSR Committee confirms that the implementation and monitoring
BAIF Development Research Foundation. of the CSR activities of the Company are in compliance with the CSR
Note 2 [ii]: objectives and CSR Policy of the Company.
LabourNet Services India Private Limited, Mann Deshi Foundation,
TARA (Technology & Action for Rural Advancement) and IMRB International.
On behalf of the CSR Committee
Note 3:
During the year, the Company has spent an amount of ` 653 lakhs on
Fair & Lovely Foundation and ` 669 lakhs on Rin Career Ready Academy Sanjiv Mehta O.P. Bhatt
in accordance with the CSR Policy of the Company. However, these spends Managing Director and Chairman, CSR Committee
have not been considered for the purpose of computing prescribed CSR Chief Executive Officer (DIN: 00548091)
spent of 2% of the Average Profits. (DIN: 06699923)

Annual Report 2016-17 Hindustan Unilever Limited

42 Directors Report & MDA

Annexure to the Directors Report

Business Responsibility Report
SECTION A GENERAL INFORMATION ABOUT THE COMPANY
1. Corporate Identity Number (CIN) of the Company L15140MH1933PLC002030
2. Name of the Company Hindustan Unilever Limited
3. Registered address Unilever House, B. D. Sawant Marg, Chakala, Andheri (East),
Mumbai - 400 099
4. Website www.hul.co.in
5. E-mail id levercare.shareholder@unilever.com
6. Financial Year reported 1st April, 2016 to 31st March, 2017
7. Sector(s) that the Company is engaged in (industrial activity 20231 Soaps
code-wise) 20233 Detergents
20236 Shampoos
20235 Toothpastes
20234 Deodorants
20237 Cosmetics
10791 Tea
10792 Coffee
10750 Packaged Foods (Including Frozen Desserts)
27501 Water Purifiers
8. List three key products/services that the Company manufactures/ Home Care (Fabric Wash, Household Care and Water Business)
provides (as in balance sheet) Personal Care (Personal Wash, Skin Care, Hair Care, Oral Care,
Colour Cosmetics and Deodorants)
Refreshments (Tea, Coffee, Ice cream and Frozen Desserts)
9. Total number of locations where business activity is undertaken by
the Company
i. Number of International Locations None
ii. Number of National Locations Registered Office:
Unilever House, B. D. Sawant Marg, Chakala, Andheri (East),
Mumbai - 400 099
Research Centre:
64, Main Road, Whitefield P O, Bangalore - 560 066
Regional Office (East):
Brooke House, 9 Shakespere Sarani, Kolkata - 700 071
Regional Office (West):
Uttara, Plot No. 2, Sector No. 11, CBD Belapur,
Navi Mumbai - 400 614
Regional Office (North):
Block No. A, Plot No. B, South City I, Delhi - Jaipur Highway,
Gurgaon - 122 001
Regional Office (South):
101, Santhome High Road, Chennai - 600 028
Regional Office (Central):
Office Space Number 101, 102, 103, 108 and 109,
Shalimar Titanium, Vibhut iKhand, Gomti Nagar, Lucknow,
Uttar Pradesh 226 010
Details of manufacturing locations, forms part of this report.
10. Markets served by the Company India

(` Lakhs)

SECTION B FINANCIAL DETAILS OF THE COMPANY

1. Paid up Capital: 21,643
2. Total Turnover: 33,89,502
3. Total profit after taxes: 4,49,009
4. Total Spending on Corporate Social Responsibility (CSR) as percentage of average 2.04% (` 10,388 Lakhs)
Net profit of the Company for last 3 financial years:

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 43

5. List of activities in which expenditure in 4 above has been incurred : Please refer to CSR Annual Report at page no. 39

SECTION C OTHER DETAILS

1. Does the Company have any Subsidiary Company/
Companies?
2. Do the Subsidiary Company / Companies participate in
the Business Responsibility (BR) initiatives of the parent
Company? If yes, then indicate the number of such
subsidiary Company(ies)?
3. Do any other entity / entities (e.g. suppliers, distributors
etc.) that the Company does business with, participate in
the BR initiatives of the Company? If yes, then indicate the
percentage of such entity / entities? [Less than 30%,
30-60%, More than 60%]
As on 31st March, 2017, the Company has 11 Subsidiary Companies.
Hindustan Unilever Foundation and Bhavishya Alliance Child Nutrition
Initiatives -- both are not-for-profit companies incorporated to promote and
implement the corporate social responsibility agenda. Both the companies
work in the areas of social, economic and environmental concerns and
contribute to the sustainability initiatives of the Company. In addition, Unilever
India Exports Limited and Ponds Exports Limited also contribute to the
sustainability initiatives of the Company.
Your Company works with stakeholders in its extended value chain through its
business responsibility initiatives.
Your Company also requires its third-party business partners to adhere to
business principles set out in Responsible Sourcing Policy and Responsible
Business Partner Policy, which underpin the third-party compliance programme.

SECTION D: BUSINESS RESPONSIBILITY (BR) INFORMATION

DETAILS OF DIRECTOR/DIRECTORS RESPONSIBLE FOR BR
The details of members of Corporate Social Responsibility Committee and their roles and responsibilities are elaborated in CSR Annual Report and
Corporate Governance Report forming part of the Annual Report.
The DIN details of the Corporate Social Responsibility Committee members are as follows:

Name Designation DIN

Mr. O. P. Bhatt* Independent Director 00548091
Mr. Aditya Narayan Independent Director 00012084
Dr. Sanjiv Misra Independent Director 03075797
Ms. Kalpana Morparia Independent Director 00046081
Mr. Sanjiv Mehta Chief Executive Officer & Managing Director 06699923
Mr. P. B. Balaji Executive Director, Finance & IT and Chief Financial Officer 02762983

*Chairman

PRINCIPLE-WISE (AS PER NVGs) BR POLICY / POLICIES (REPLY IN Y/N)

Respect and integrity for its people, environment and other businesses
have always been at the heart of your Companys Corporate Responsibility.
Your Companys Corporate Purpose states that to succeed requires
the highest standards of corporate behaviour towards everyone we work
with, the communities we touch, and the environment on which we have
an impact.
the Company which describes the operational standards that everyone at
Hindustan Unilever Limited follows.
The CoBP and USLP framework supplement the requirements under the
National Voluntary Guidelines and cover principles beyond the principles
enunciated under the National Voluntary Guidelines.

This purpose is supported by the Code of Business Principles (CoBP) of The National Voluntary Guidelines provide the following nine principles.

Principle 1: Ethics, Transparency and Accountability [P1] Principle 6: Environment [P6]

Principle 2: Products Lifecycle Sustainability [P2] Principle 7: Policy Advocacy [P7]
Principle 3: Employees Well-being [P3] Principle 8: Inclusive Growth [P8]
Principle 4: Stakeholder Engagement [P4] Principle 9: Customer Value [P9]
Principle 5: Human Rights [P5]
(a) Details of compliance (Reply in Y/N)

Sr. Questions P1 P2 P3 P4 P5 P6 P7 P8 P9
No.
1 Do you have policy/policies for Y Y Y Y Y Y Y Y Y
2 Has the policy been formulated in consultation Y Y Y Y Y Y Y Y Y
with the relevant stakeholders?
3 Does the policy conform to any national / Y Y Y Y Y Y Y Y Y
international standards? If yes, specify?
The Code of Business Principles (CoBP) of the Company confirms to the United Nations
Global Compact (UNGC) guidelines and International Labour Organisation (ILO) principles.
The Unilever Sustainable Living Plan Progress Report conforms to Global Reporting Initiative
(GRI) indicators.

Annual Report 2016-17 Hindustan Unilever Limited

44 Directors Report & MDA

Sr. Questions P1 P2 P3 P4 P5 P6 P7 P8 P9
No.
4 Has the policy been approved by the Board. Y Y Y Y Y Y Y Y Y
If yes, has it been signed by MD/owner/CEO/
appropriate Board Director?
The Code of Business Principles and the Unilever Sustainable Living Plan (USLP) are
frameworks adopted by Unilever globally and have been adopted by the Company.
5 Does the Company have a specified Y Y Y Y Y Y Y Y Y
Committee of the Board/Director/Official to
oversee the implementation of the policy?
The CoBP is administered under the overall supervision of the Management Committee
of the Company, headed by the Chief Executive Officer and Managing Director. The Audit
Committee of the Board reviews the implementation of CoBP. The CSR Committee of the
Board reviews the implementation of the USLP besides the scope that has been laid out for
this Committee under the Companies Act, 2013.
6 Indicate the link for the policy to be viewed USLP: https://www.hul.co.in/sustainable-living/
online CoBP: https://www.hul.co.in/Images/4297-cobp-summary-doc_tcm1255-409220_en.pdf
Supplier Code:
https://www.hul.co.in/about/who-we-are/purpose-and-principles/Business-Partner-Code/
7 Has the policy been formally communicated to Y Y Y Y Y Y Y Y Y
all relevant internal and external stakeholders?
8 Does the Company have in-house structure to Y Y Y Y Y Y Y Y Y
implement the policy/policies?
9 Does the Company have a grievance redressal Y - Y Y Y Y - - Y
mechanism related to the policy/policies to
address stakeholders grievances related to
the policy/policies?
10 Has the Company carried out independent Y Y Y Y Y Y Y Y Y
audit / evaluation of the working of this policy
by an internal or external agency?
(b) If answer to the question at serial number 1 against any principle, is No, please explain why: Not Applicable

GOVERNANCE RELATED TO BR
The Management Committee of the Company reviews complaints,
issues and concerns received under the CoBP framework as well as the
implementation of the CoBP on a monthly basis. The Audit Committee
of the Company reviews the implementation of the CoBP on a quarterly
basis. The Corporate Social Responsibility (CSR) Committee of the
Company comprising a majority of Independent Directors is responsible
for formulating, implementing and monitoring the CSR Policy of the
Company. The Committee meets at least twice a year to review progress
on various sustainability initiatives, including progress under the
Unilever Sustainable Living Plan (USLP).
Reporting progress to stakeholders on USLP targets forms an
important part of the governance procedures of your Company. Your
Company publishes an update on progress in India under USLP,
every year. The USLP India Progress Report can be accessed at
https://www.hul.co.in/sustainable-living/. In line with the requirements
of the Companies Act, 2013, your Company has also published the
CSR Annual Report which forms part of this Annual Report and
the Business Responsibility Report for the year are available at
https://www.hul.co.in/investor-relations/annual-reports/.
PRINCIPLE 1: ETHICS, TRANSPARENCY AND
ACCOUNTABILITY
BUSINESSES SHOULD CONDUCT AND GOVERN THEMSELVES WITH
ETHICS, TRANSPARENCY AND ACCOUNTABILITY
The standards on ethics, transparency and accountability are captured in your
Companys Code of Business Principles (CoBP). The CoBP is the Companys
statement of values and represents the standard of conduct which everyone
associated with your Company is expected to observe in all business endeavours.
Your Company also has a Whistle Blower Policy which allows
employees to bring to the attention of the Management, promptly and
directly, any unethical behaviour, suspected fraud or irregularity in the
Company practices which is not in line with the CoBP. The CoBP and
Whistle Blower Policy and their implementation are explained in detail
under the section Company Policies of this report.
Complaints, issues and concerns received under the CoBP framework are
duly investigated and reviewed by the CoBP Committee(s). In 2016-17, a total
of 148 complaints and issues raised by employees and business partners
were reported under the CoBP framework and the same were investigated
and dealt with in accordance with the CoBP protocols of the Company.
PRINCIPLE 2: PRODUCTS LIFECYCLE
SUSTAINABILITY
BUSINESSES SHOULD PROVIDE GOODS AND SERVICES THAT ARE SAFE
AND CONTRIBUTE TO SUSTAINABILITY THROUGHOUT THEIR LIFE CYCLE
Consumers increasingly prefer responsible brands and responsible
businesses. Your Companys brands have integrated responsibility
and sustainability into both their purpose and products. For example,
your Companys brands such as Pureit (Water), Domex (Sanitation) and
Lifebuoy (Hygiene) have driven the water, sanitation and hygiene (WASH)
agenda in India. Your Company has reached over 130 million people by
end of 2016 through its initiatives in the area of health and well-being.
It is crucial for your Company to manage the environmental impact of
each stage of its products lifecycle to achieve USLP goals. Life Cycle
Assessment (LCA) is one of several techniques that your Company uses
to understand the impacts of its products on the environment. Your
Company uses LCA in three ways: in new product design; for assessments
of existing products; and in science and methodological development.

Hindustan Unilever Limited Annual Report 2016-17


Sustainable purpose, sustainable products
The contribution of these purpose driven brands is not limited to being
socially relevant, they also are environmentally sustainable. Many of your
Companys food products are made from sustainably sourced agricultural
raw materials. For example 100% of tomatoes used in your Companys
Kissan ketchup are from sustainable sources. Your Company is also
working through its supplier partners with 10,000 smallholder farmers
in Southerrn India for sustainable farming of gherkins. This is a part of
the innovative Responsible Farming Programme with the aim to increase
productivity, develop best practices and improve livelihoods.
While your Company sources products responsibly, it also disposes
the waste generated during the manufacturing operations in an
environmentally friendly manner. All our manufacturing sites are zero
non-hazardous waste to landfills. The Company has also embraced the
Unilever global target of ensuring that all of its plastic packaging is fully
reusable, recyclable or compostable by 2025.
Several other initiatives that your Company has undertaken in this area are
elaborated in the Environment, Safety, Health And Energy Conservation
section of the Directors Report. Innovative initiatives of your Companys
purpose driven brands are featured on the Companys website at
www.hul.co.in
Product safety
Being responsible also means ensuring that your Companys products are
of high quality and completely safe for use by its consumers. The CoBP of
the Company sets out the commitment to provide products and services
which are safe.
Unilever has a Safety & Environmental Assurance Centre (SEAC) which
assures the safety and environmental sustainability of the products as
well as the processes used to manufacture them. Your Company works
closely on all safety and environmental assurance issues with SEAC.
In case consumers face any issues with the products they can reach the
Company through Levercare - an initiative of the Company that allows
consumers to register complaints and obtain information regarding the
Companys products.
PRINCIPLE 3: EMPLOYEES WELL-BEING
BUSINESSES SHOULD PROMOTE THE WELL-BEING OF ALL EMPLOYEES
Your Companys well-being strategy aims to create a working environment
that is supportive of employees personal lives, while meeting your
Companys business needs.
Vision Zero Strategy
Your Company has a vision to become an injury-free organisation. The
Total Recordable Frequency Rate (TRFR) reduced by 75% in 2016 compared
to 2008 baseline for accidents in the factories and offices. Your Company has
a Central Safety, Health and Environment Sub-Committee, which is driven by
the Chief Executive Officer. The role of this committee is elaborated under the
Environment, Safety, Health and Energy Conservation section of this report.
Holistic well-being
Your Company has defined holistic well-being as a sustainable state of
feeling good and functioning well, physically, mentally and emotionally.
Lamplighter is your Companys framework for addressing employee
health and well-being. In 2016, your Company partnered with experts in
the field of mental health and counselling and set up toll-free helplines in
nine languages for its employees to reach out and speak to a Counsellor
and seek advice on physical and mental health related matters.
Capability building
Apart from physical and mental health, your Company focuses on
continuous learning and building organisational capabilities of its people:
Sparkle: It is a technology tool designed for capability management
of blue-collar workers.
Overview Reports Financial Statements 45
Unilever Future Leaders Programme (UFLP): Your Company identifies
talent early and invests to build capability through this flagship
programme.
70:20:10 Capability Building: Your Company follows the 70:20:10
capability building approach with 70% capability built on the job
through live assignments, 20% through coaching, short-term projects
and exposures and 10% through classroom, virtual and e-learning.
People Planning Processes: Leaders at each level review and assess
talent on both, the What and the How of performance through an
objective process. Capability building and career plans for talent form
an integral part of this process.
Growth through Diversity of Experience: Job rotation and diversity of
experiences are integrated at all stages of the individuals career.
Diversity and inclusion
Over 170 Inclusive Leaders have been recognised across the Company
for outstanding contribution and role modelling of inclusive leadership,
nominated by employees themselves.
In the area of diversity, your Company ensures a gender-balanced
workforce. More than one-third of your Companys managers are women.
In 2017, over 45% of the hires were mid-career recruits (MCRs) and
55% of UFLP hires were women.
Your Company has been consistently recognised at various awards and
forums such as Best Companies for Women in India for its culture of
diversity and inclusiveness. Your Company's onsite Daycare Centre in
Mumbai has been ranked as the No.1 Preschool Program in Mumbai by
Education Today consistently for the past two years.
Affirmative action and prevention from sexual
harassment
Your Company believes in providing Equal Opportunity / Affirmative Action.
It has a Policy on Affirmative Action and a Policy on Prevention of Sexual
Harassment to ensure a harassment-free workspace for the employees.
Sexual harassment cases are dealt with as per the Company Policy on
Prevention of Sexual Harassment and the Code of Business Principles
and applicable laws. Communication is sent to all employees on a regular
basis on various aspects of prevention of sexual harassment at work
through e-articles and other means of communication. During the year
2016-17, only one complaint with allegation of sexual harassment has
been filed with the Company and the same has been processed under the
provisions of the Prevention of Sexual Harassment Act.
Around 430 people were trained on ending sexual harassment and related
topics. Training included:
New Joiners / Trainees / Interns were inducted on the subject of
Prevention of Sexual Harassment of Women at Workplace.
In addition to this, during the year, employees across locations
were taken through a refresher programme on Prevention of Sexual
Harassment at Workplace.
Inside offices, women employees are discouraged from working beyond
8.30 p.m. Any instances of late working are detected by the card reader
and sent to the employee's Line Manager automatically. In circumstances
where late working becomes unavoidable, women employees are
required to (i) Take a drop home from a Company approved car vendor
only; (ii) Be escorted by a male colleague back home; (iii) Inform their
Line Managers upon reaching home that they have reached safely.
Fair labour practices
Your Company drives fairness in the workplace by advancing human
rights across its operations and extended supply chain. Your Company has
an excellent record on industrial relations and since 2015 has maintained
a record of near-zero loss of man-days due to industrial unrest. Your
Company currently has 5,976 employees (excluding workmen), of which
over 4,000 employees are employed on contractual / temporary basis as
on 31st March, 2017.
Annual Report 2016-17 Hindustan Unilever Limited
46 Directors Report & MDA
Freedom of association, participation and collective
bargaining
All workers are free to exercise their right to form and / or join trade
unions or to refrain from doing so and to bargain collectively.
There are 105 employee associations across your Company. Nearly
11,000 permanent employees are members of these associations.
There are over 119 permanent female blue-collar employees and over
21 permanent blue-collar employees with disabilities in your Companys
factories.
During the last year, your Company entered into long-term settlements
with around 4,341 employees covering 12 factories across India.
Managing grievances
Your Companys grievance redressal mechanisms ensure that all
employees can raise issues and concerns as simply as possible. The CoBP
and Whistle Blower Policy provide for reporting in confidence of issues
like child labour, sexual harassment etc. The Company has established
a vigil mechanism for Directors and employees to report their genuine
concerns, details of which have been given in the Corporate Governance
Report. During the year, there have been no complaints alleging child
labour, forced labour, involuntary labour and discriminatory employment.
PRINCIPLE 4: STAKEHOLDER ENGAGEMENT
BUSINESSES SHOULD RESPECT THE INTERESTS OF, AND BE
RESPONSIVE TOWARDS ALL STAKEHOLDERS, ESPECIALLY THOSE WHO
ARE DISADVANTAGED, VULNERABLE AND MARGINALISED.
Your Company actively engages with stakeholders in its own operations
and beyond to bring transformational change.
The Company engages in multiple ways with specific important stakeholders:
Consumers and customers
Your Company constantly seeks to understand the needs of the consumers
and brings in technology to ensure that the consumers are kept informed
and engaged on your Companys products and services.
Winning In Many Indias: Your Company consolidated the ambitious
transformation agenda of Winning In Many Indias (WIMI) in 2016.
It has been a year of strengthening the WIMI thinking across
markets, embedding it into your Companys ways of working. This has
helped the Company to move the needle on quality of servicing and
in-market execution by getting closer to the customers, shoppers
and consumers. This approach has strengthened your Companys
connect with them across geographical clusters, and will be a source
of competitive advantage for years to come.
Dial Up The Big Q: Your Company has been a pioneer in the area of
big data and analytics as a tool to drive sustainable growth. Using
more than millions of transactions captured every month, your
Company uses intelligent analytics at the back end, to deliver better
on-shelf availability in stores. Your Company will continue to invest
in the power of knowledge and big data to enhance the impact and
effectiveness of execution.
Building Brands In Store: Investments made by your Company in
building brands in stores in the Modern Trade channel has started
showing results. In 2016, prominence of our brands on shelf was
significantly higher than previous years. Your Company saw strong
growth across all key modern trade retail partners, driven by strong
joint business plans. Your Companys position in FMCG as market
leader coupled with the early investments in the e-commerce channel
has helped your Company take the lead in developing this channel
with key online and offline retailers.
Levercare: Your Company has Levercare, a toll-free number, e-mail
and a postal address where consumers can reach the Company
directly. Levercare gives consumers the promise of better service and
provides the Company to connect with consumers and understand
Hindustan Unilever Limited Annual Report 2016-17
their needs, expectations and aspirations. It helps consumers voice
their queries, grievances and offer suggestions / ideas. Levercare
has leveraged technology to deliver personalised service that helps
to build one-on-one relationships with consumers and customers to
delight them. Detailed description of more such initiatives is given in
Principle 9 (Customer Value).
Shareholders and investors
Your Company regularly interacts with its shareholders and investors
through results announcements, annual report, media releases,
Companys website and subject-specific communications. The
Annual General Meeting gives the shareholders an opportunity to come in
direct communication with the Board of Directors and the Management.
During this meeting, the Board engages with shareholders and answers
their queries on varied subjects.
Your Company has a designated e-mail address for shareholders. The
Investor Service Department regularly engages with the shareholders to
resolve queries, grievances, if any, and provides guidance to shareholders
for any Company-related matters. The Investor Relations team also
interacts regularly with investors and analysts, through quarterly
results calls, one-on-one and group meetings, participation at investor
conferences and the annual investors meet.
Your Company has a Mobile Investor Relations App for smart phones and
tablets and is compatible both on android as well as iOS platforms. Investors
can access information such as share price, quarterly results, Company
presentations, press releases and annual reports on the click of a button.
Government
Your Company actively engages with Governments, intergovernmental
organisations (IGOs) and regulators. All these interactions are conducted by
duly authorised and appropriately trained individuals with honesty, integrity
and openness. The engagements are in full compliance with local laws and
in accordance with the Code of Business Principles and Policy.
NGOs
Your Company engages with several NGOs for our various sustainability
projects including in the areas of water, sanitation and hygiene. Your
Companys wholly-owned subsidiary, Hindustan Unilever Foundation
(HUF), partners with several NGOs for undertaking water conservation
programmes. This year, your Company partnered with Pratha Samajik
Sanstha, a community-based organisation, to launch Suvidha, an urban
water hygiene and sanitation community centre in Mumbai.
Media
Your Company engages with media to keep its stakeholders updated
about the developments in the Company. Regular interactions with
print, television and online media take place through press releases,
media events and during the financial results announcements. Your
Company also ensures timely and appropriate responses to media for
any information requests within the stipulated disclosure norms.
Employee engagement
Your Company has several communication processes instituted to
ensure a two-way communication channel with its employees. These
include:
CEO Report Back: Quarterly performance update from the CEO to
all employees.
Annual Review: All managers are invited to the Annual Review
which is conducted in four major metros.
Others: The Company has other in-house communication channels,
which help employees to connect, bond, inspire, express and
celebrate their achievements.
Other key opinion formers
Every year, the Company organises an event and provides an update on

the progress of the USLP to key opinion formers representing various
stakeholder groups such as NGOs, IGOs, Government bodies, industry
bodies and consumer organisations.
PRINCIPLE 5: HUMAN RIGHTS
BUSINESSES SHOULD RESPECT AND PROMOTE HUMAN RIGHTS
Your Company seeks to uphold and promote human rights in its
operations, by upholding values and standards; in relationships with
business and partners; and by working through external initiatives such
as the United Nations Global Compact.
Unilever has identified eight human rights issues as priority and is
committed to addressing them across its operations globally. The eight
priority issues are: discrimination, fair wages, forced labour, freedom
of association, harassment, health and safety, land rights and working
hours. Unilevers approach to managing these critical human rights
issues globally is elaborated on the Unilever website.
The report on human rights released by Unilever in 2015 outlines
Unilevers goals not only to respect human rights but to actively advance
them across all areas of the business.
In India, your Company fully adheres to Unilevers approach to human
rights. In addition to this, your Companys CoBP upholds the principles
of human rights and fair treatment. The Code also conforms to the
International Labour Organisation (ILO) principles.
The principles of human rights are followed in the same spirit within as
well as outside the organisation when engaging with business partners.
Unilevers Understanding the Responsible Sourcing Audit (URSA) Guide
for suppliers reinforces the principles of human rights and labour rights
for all suppliers of your Company and is available on Unilevers website.
No complaints were received regarding human rights violation during
the year.
PRINCIPLE 6: ENVIRONMENT
BUSINESSES SHOULD RESPECT, PROTECT AND MAKE EFFORTS TO
RESTORE THE ENVIRONMENT
As part of USLP, your Company strives to grow the business whilst
decoupling environmental footprint. Accordingly, your Company has taken
ambitious targets of year-on-year reductions in CO2 emissions (kg/tonne
of production), groundwater abstraction (m3/tonne of production) and
waste generation (kg/tonne of production) in its operations. Some of the
key reductions in CO2, water, and waste in your Companys manufacturing
operations with 2008 as the baseline are:
CO2 emissions (kg/tonne of production) reduced by 49%.
Water consumption (m3/tonne of production) reduced by 53%.
Total waste (kg/tonne of production) generated from the factories
reduced by 45%.
The details on the specific initiatives which led to this reduction are
included in the Environment, Safety, Health and Energy Conservation
section of Directors Report.
Monitoring procedures
The progress on sustainability is monitored at different levels as
mentioned below:
Sustainability Governing Council: The top leadership from respective
business verticals and functions constitute the Sustainability
Governing Council. The Company has a governance mechanism
and scorecard to monitor the progress on USLP commitments. The
Council reports the progress to the CEO and Management Committee
on a quarterly basis.
Environment Sub-Committee: This is led by the Executive Director,
Supply Chain, and has members from various departments like Safety,
Health and Environment, Finance, Engineering, R&D and Legal. The
Overview Reports Financial Statements 47
team engages periodically to review environment performance and
define the implementation strategy.
Risk Assessment
All the emissions / waste generated by your Company are generally within
the permissible limits given by respective state Pollution Control Boards
(PCBs).
During the year, significant progress was made in your Companys efforts
to expedite the remediation of soil in the former factory premises in
Kodaikanal, which is the only remaining work. On 31st December, 2016,
your Company received permission from the local regulator, Tamil Nadu
Pollution Control Board (TNPCB), to commence soil remediation on a trial
basis at the former factory site. Your Company has initiated the process
for both the preparatory work as well as for securing other statutory
approvals required to start the trial. Your Company is committed to
cleaning up the former factory site in Kodaikanal to a standard that is fully
protective of human health and the environment. For more details, please
refer to the Directors Report.
PRINCIPLE 7: POLICY ADVOCACY
BUSINESSES, WHEN ENGAGED IN INFLUENCING PUBLIC AND
REGULATORY POLICY, SHOULD DO SO IN A RESPONSIBLE MANNER
Your Companys approach to advocacy is guided by the CoBP. The Code
provides that any contact by the Company or its business associates
with government, legislators, regulators or NGOs must be done with
honesty, integrity, openness and in compliance with applicable laws.
Only authorised and appropriately trained individuals can interact with
these organisations. Prior internal approval is required for initiating any
contact between the Company, its representatives and officials, aimed at
influencing regulation or legislation.
The Company is represented in key industry and business associations which
include Confederation of Indian Industry (CII), Federation of Indian Chamber
of Commerce and Industry (FICCI), Associated Chamber of Commerce and
Industry of India (ASSOCHAM), Bombay Chamber of Commerce and Industry
(BCCI) and Advertising Standards Council of India (ASCI).
Many of the Board and senior leadership team members are associated
with several global bodies like the World Economic Forum (WEF),
United Nations Global Compact (UNGC), apart from the leading business
Chambers in India.
Your Company participates in multi-stakeholder debates and, when
relevant, responds to public consultations. Some of the key issues on
which your Company engaged with the government in 2016-17 include:
Effective plastic waste management
Engagement with government on fiscal issues including Goods and
Services Tax (GST)
Building greater awareness of handwashing practices to reduce
diarrhoea
Seeking action against parallel imports of goods in the country
Seeking interventions by Tea Board for maintaining sustainable tea
production
Seeking less time-consuming procedures for effecting Related Party
Transactions
Offering partnership to the Government for Swachh Bharat Abhiyan
Consumer Protection Bill seeking support for implementing
workable provisions
PRINCIPLE 8: INCLUSIVE GROWTH
BUSINESSES SHOULD SUPPORT INCLUSIVE GROWTH AND EQUITABLE
DEVELOPMENT
Your Companys inclusive growth approach focuses on improving the livelihoods
of smallholder farmers, supporting small-scale retailers and helping young
entrepreneurs. Some of the important initiatives are mentioned below.
Annual Report 2016-17 Hindustan Unilever Limited
48 Directors Report & MDA
Improving livelihoods of smallholder farmers
Your Company has been associated with a number of smallholder farmers
through its supplier partners, training them on good agricultural practices
like drip irrigation, nutrient management, pest and disease management
to improve their livelihood. A total of 10,000 smallholder gherkin farmers
in Southern India have benefitted from Unilevers innovative Responsible
Farming Programme. The aim of this programme is to increase productivity,
develop best practices and improve livelihoods of farmers.
Your Company has worked with its suppliers to partner with smallholder
farmers for cultivation of tomatoes. These farmers have also benefitted
from similar training initiatives. Till date, your Company has reached
out to over 8,000 smallholder farmers who cultivated tomatoes on more
than 11,000 acres of land. In 2016 alone, your Company reached out to
5,000 smallholder farmers who grew tomatoes on 7,000 acres of land.
Empowering women micro-entrepreneurs
Project Shakti is your Companys initiative to financially empower rural
women and create livelihood opportunities for them. In 2010, your
Company extended Project Shakti to include Shaktimaans. They are
typically the husbands or brothers of women entrepreneurs who sell the
products on bicycle to surrounding villages. Currently, there are a total of
72,000 micro-entrepreneurs supported by 48,000 Shaktimaans.
Empowering communities through Prabhat
Project Prabhat (meaning dawn in Hindi) is your Companys programme fully binding on the Company, may not be binding on its consumers and
to contribute to and engage with communities around its sites.
Prabhat focuses on three priority areas - improving health and hygiene,
conserving water potential and enhancing livelihoods. Project Prabhat
has directly impacted over six and a half lakh people as of December 2016.
Rin Career Ready Academy
Rin Career Ready Academy aims to inspire, educate and equip the youth from
modest backgrounds with skills in English speaking, office dressing and interview
preparation. So far, over three and a half lakh people have benefited from this
programme. In 2016 alone, nearly two lakh people benefited from this programme.
PRINCIPLE 9: CUSTOMER VALUE information table on the back of pack in compliance with local legislation.
BUSINESSES SHOULD ENGAGE WITH AND PROVIDE VALUE TO THEIR
CUSTOMERS AND CONSUMERS IN A RESPONSIBLE MANNER
Your Companys strong distribution network comprises millions of
outlets serviced by over 3,700 stockists and associates who help deliver
Companys products. Your Company has undertaken some important
initiatives during the year to become more customer-centric and win in
the marketplace. These initiatives include:
Call centres: The call centres setup for retailers have helped many of
your Companys traditional trade customers reach out directly to the
Company. Your Company receives more than 3,000 calls every month
from distributors and retailers. The calls received from retail outlets
provide useful insights and help the Company understand issues and
opportunities in the marketplace better and address them effectively.
Partner of choice: Your Company registered strong growth across all
key modern trade retail partners, driven by strong joint business plans.
Your Company made significant investment in capability building in
e-commerce. An efficient team with diverse talent combined with the
best global practices is a competitive advantage for your Company in
area of e-commerce.
Responsible marketing and communication
Your Company has four clearly defined principles that guide its
communications with consumers:
Your Company is committed to building trust through responsible
practices and through transparent communication both directly to
consumers and indirectly through other key stakeholders.
1[1]
Where applicable and legally allowed in accordance with local or regional industry agreements.
Hindustan Unilever Limited Annual Report 2016-17
It is your Companys responsibility to ensure that its products are safe
and that the Company provides clear information on their use and any
risks that are associated with their use.
Your Company fully supports a consumer's right to know what is in
the products and is transparent in terms of ingredients, nutrition
values and the health and beauty properties of its products.
Your Company uses a combination of channels, which includes
product labels, websites, careline phone numbers and leaflets to
communicate openly with its consumers.
Your Company also supports industry self-regulation and the development
of self-regulatory codes for all its marketing and advertising activities
and applies these codes across its businesses. Your Company is one of
the founder members of Advertising Standards Council of India (ASCI), a
self-regulatory body which has developed principles and codes in the area
of advertising and marketing. During the year, 36 complaints were filed
with ASCI against advertisements made by your Company, out of which all
but one were closed at the end of the year.
Ombudsman
Your Company has appointed four retired judges of different High Courts
to act as Ombudsman to resolve consumer and customer grievances
and disputes. The Ombudsman independently reviews the merits of the
complaint and decides on the issue. The Company has taken the view that
the decisions arrived at such dispute resolution meetings, while being
customers and if they choose to continue with litigation, they are free to
do so. Your Company has been impleaded in certain legal cases, including
those relating to consumer / customer disputes. At the end of the year,
there were 63 consumer cases pending.
Labels and Pack Information
All Company products comply with the applicable regulations such as
the Drugs and Cosmetics Act, Legal Metrology Act, Bureau of Indian
Standards Specifications, Trademark Act and Copyright Act, Food Safety
and Standards Act, Tea Act, Tea Board Regulations for Labels and Pack
Information. The food and beverage products also carry a nutritional
Your Company has initiated Guideline Daily Amount (GDA) labelling on its
products packs in 20141[1].
In addition to national laws and self-regulatory codes in India, your
Company also applies Unilevers principles to the marketing and
advertising of all its food and beverage products directed at children
(below 12 years). These principles require that marketing practices:
Do not convey misleading messages
Do not undermine parental influence. Advertisements always show
parents as gatekeepers to the product being consumed
Do not encourage pester power
Do not suggest time/sense of urgency or price minimisation pressure
Do not encourage unhealthy dietary habits
Do not blur the boundary between programme or editorial content
and commercial promotion
Your Company has voluntarily committed to restrict all paid marketing
communications directed primarily at children under the age of six years.
Your Company restricts marketing and advertising to children from the
age of six to under 12 for all products except those that meet (i) Unilevers
nutrition criteria, or (ii) any common industry criteria committed to, such
as in theIndia Pledge, and (iii) any binding criteria set by public authorities.
On behalf of the Board
 Harish Manwani
Chairman
Mumbai, 17th May, 2017 (DIN : 00045160)
 Overview Reports Financial Statements 49

CORPORATE GOVERNANCE
I believe that nothing can be greater than a business, however small it may be, that is governed
by conscience; and that nothing can be meaner or more petty than a business, however large,
governed without honesty and without brotherhood.
Transparency and accountability are the two basic tenets of Corporate
Governance. At Hindustan Unilever, we feel proud to belong to a Company
whose visionary founders laid the foundation stone for good governance
long back and made it an integral principle of the business, as demonstrated
in the words above.
Responsible corporate conduct is integral to the way we do our business.
Our actions are governed by our values and principles, which are reinforced
at all levels within the Company. At Hindustan Unilever, we are committed
to doing things the right way which means taking business decisions
and acting in a way that is ethical and is in compliance with applicable
legislation. Our Code of Business Principles is an extension of our values
and reflects our continued commitment to ethical business practices
across our operations. We acknowledge our individual and collective
responsibilities to manage our business activities with integrity. Our Code
of Business Principles inspires us to set standards which not only meet
applicable legislation but go beyond in many areas of our functioning.
To succeed, we believe, requires highest standards of corporate behaviour
towards everyone we work with, the communities we touch and the
environment on which we have an impact. This is our road to consistent,
competitive, profitable and responsible growth and creating long term
value for our shareholders, our people and our business partners. The
above principles have been the guiding force for whatever we do and shall
continue to be so in the years to come.
The Board of Directors (the Board) is responsible for and committed to
sound principles of Corporate Governance in the Company. The Board
plays a crucial role in overseeing how the management serves the short
and long term interests of shareholders and other stakeholders. This belief
is reflected in our governance practices, under which we strive to maintain
an effective, informed and independent Board. We keep our governance
practices under continuous review and benchmark ourselves to best
practices across the globe.
William Hesketh Lever
THE BOARD OF DIRECTORS
The Board of Directors is entrusted with the ultimate responsibility of
the management, general affairs, direction and performance of the
Company and has been vested with requisite powers, authorities and
duties. The Management Committee of the Company is headed by the
Managing Director and Chief Executive Officer and has business /
functional heads as its members, which look after the management of
the day-to-day affairs of the Company.
Composition
The Board of your Company has a good mix of Executive and
Non-Executive Directors with half of the Board of the Company
comprising of Independent Directors. As on date of this Report, the Board
consists of ten Directors comprising one Non-Executive Chairman, five
Independent Directors and four Executive Directors. The composition of
the Board represents an optimal mix of professionalism, knowledge and
experience and enables the Board to discharge its responsibilities and provide
effective leadership to the business. The positions of the Chairman of the
Board and the Chief Executive Officer of the Company are held by separate
individuals, where the Chairman of the Board is a Non-Executive Director.
None of the Directors of your Company are inter-se related to each other.
Mr. Dev Bajpai, Executive Director, Legal & Corporate Affairs and Company
Secretary was appointed as an Additional Director on the Board of the
Company with effect from 23rd January, 2017 to hold office up to the date of
the next Annual General Meeting of the Company. Mr. Dev Bajpai has also
been appointed as a Whole-time Director on the Board with effect from
23rd January, 2017, for a period of five years subject to approval of Members of
your Company at Annual General Meeting.
The details of each member of the Board along with the number of
Directorship(s) / Committee Membership(s) / Chairmanship(s) and date
of joining the Board are provided herein below:

Composition and Directorship(s) / Committee Membership(s) / Chairmanship(s) as on 31st March, 2017

Name Date of joining Number of Directorship Membership(s) of Chairmanship(s) of
the Board shares held in in other Committees of other Committees of other
the Company Companies# Companies## Companies##
Non-Executive Chairman
Harish Manwani 29.04.2005 22,130 - - -
Managing Director and CEO
Sanjiv Mehta 01.10.2013 - - - -
Executive Director (Finance & IT) and CFO
P. B. Balaji 01.07.2014 12,406 - - -
Executive Directors
Pradeep Banerjee 01.03.2010 52,886 1 - -
Dev Bajpai 23.01.2017 33,326 - - -
Independent Directors
Aditya Narayan 29.06.2001 - 3 2 1
S. Ramadorai 20.05.2002 35 8 - -
O. P. Bhatt 20.12.2011 - 2 3 -
Sanjiv Misra 08.04.2013 - 2 - 1
Kalpana Morparia 09.10.2014 - 1 1 1
Excluding Private Limited Companies, Foreign Companies, Section 8 Companies and Alternate Directorships.
#

##
Includes only Audit Committee and Stakeholders Relationship Committee.
Annual Report 2016-17 Hindustan Unilever Limited
50 Corporate Governance
The number of Directorships, Committee Membership(s) / Chairmanship(s) of
all Directors is within respective limits prescribed under the Companies Act,
2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015 (hereinafter referred to as Listing Regulations).
Appointment and Tenure
The Directors of the Company are appointed by Members at the
General Meetings. In accordance with the Articles of Association of the
Company, all Directors, except the Managing Director and Independent
Directors of the Company, step down at the Annual General Meeting
each year and, if eligible, offer themselves for re-election. The
Managing Director of the Company is appointed for a term of five years as
per the requirement of the statute. The Executive Directors on the Board
have been appointed as per the provisions of the Companies Act, 1956/
Companies Act, 2013 and serve in accordance with the terms of their
contract of service with the Company.
As regards the appointment and tenure of Independent Directors,
following is the policy adopted by the Board:
The Company has adopted the provisions with respect to appointment
and tenure of Independent Directors which are consistent with the
Companies Act, 2013 and Listing Regulations.
The Independent Directors will serve a maximum of two terms of five
years each.
The Company would not have any upper age limit of retirement of
Independent Directors from the Board and their appointment and
tenure will be governed by provisions of the Companies Act, 2013 and
Listing Regulations.
Board Independence
Our definition of Independence of Directors is derived from
Section 149(6) of the Companies Act, 2013 and Regulation 16 of
Listing Regulations. Based on the confirmation / disclosures received
from the Directors and on evaluation of the relationships disclosed, all
Non-Executive Directors other than the Chairman are Independent.
Mr. Harish Manwani, who was formerly Chief Operating Officer of the parent
Company, is not considered as an Independent Director.
Board Meetings
The Board meets at regular intervals to discuss and decide on
Company / business policy and strategy apart from other Board business. The
Board / Committee Meetings are pre-scheduled and a tentative annual
calendar of the Board and Committee Meetings is circulated to the Directors
well in advance to facilitate them to plan their schedule and to ensure
meaningful participation in the meetings. However, in case of a special and
urgent business need, the Boards approval is taken by passing resolutions
by circulation, as permitted by law, which is noted and confirmed in the
subsequent Board meeting.
The notice of Board meeting is given well in advance to all the Directors.
Usually, meetings of the Board are held in Mumbai. The Agenda of the
Board / Committee meetings is set by the Company Secretary in consultation
with the Chairman and the Managing Director and Chief Executive Officer of
the Company. The Agenda is circulated a week prior to the date of the
meeting. The Agenda for the Board and Committee meetings cover items
set out as per the guidelines in Listing Regulations to the extent it is relevant
and applicable. The Agenda for the Board and Committee meetings include
detailed notes on the items to be discussed at the meeting to enable the
Directors to take an informed decision.
Prior Approval from the Board is obtained for circulating the agenda items
with shorter notice for matters that form part of the Board and Committee
agenda and are considered to be in the nature of Unpublished Price Sensitive
Information.
During the financial year ended 31st March, 2017, six Board meetings were held
on 9th May, 2016, 18th July, 2016, 26th October, 2016, 23rd December, 2016,
23rd January, 2017 and 21st-23rd March, 2017. The maximum interval between
any two meetings was well within the maximum allowed gap of 120 days.
Hindustan Unilever Limited Annual Report 2016-17
Board Business
The normal business of the Board includes:
framing and overseeing progress of the Companys annual plan and
operating framework;
framing strategies for shaping of portfolio and direction of the
Company and for corporate resource allocation;
reviewing financial plans of the Company;
reviewing quarterly and annual business performance of the Company;
reviewing the Annual Report and Financial Statements for adoption by
the Members;
reviewing the progress of various functions and businesses of the
Company;
reviewing the functioning of the Board and its Committees;
reviewing the functioning of the subsidiary companies;
considering and approving declaration / recommendation of dividend;
reviewing and resolving fatal or serious accidents or dangerous
occurrences, any materially significant effluent or pollution problems
or significant labour issues, if any;
reviewing the details of significant development in human resources
and industrial relations front;
reviewing details of foreign exchange exposure and steps taken by the
management to limit the risks of adverse exchange rate movement;
reviewing compliance with all relevant legislations and regulations
and litigation status as well as steps taken by the Company to rectify
instances of non-compliance, including materially important show
cause, demand, prosecution and penalty notices, if any;
reviewing Board Remuneration Policy and individual remuneration
packages of Directors;
advising on corporate restructuring such as merger, acquisition, joint
venture or disposals, if any;
appointing Directors on the Board and Members of Management
Committee;
reviewing and approving the Corporate Social Responsibility Policy of
the Company and monitoring implementation thereof;
reviewing details of risk evaluation and internal controls;
reviewing reports on progress made on the ongoing projects;
monitoring and reviewing Board Evaluation framework.
Board Support
The Company Secretary is responsible for collation, review and
distribution of all papers submitted to the Board and Committees
thereof for consideration. The Company Secretary is also responsible for
preparation of the Agenda and convening of the Board and Committee
meetings. The Company Secretary attends all the meetings of the Board
and its Committees, either in the capacity of Secretary of the Committees
or Member of the Committee, advises / assures the Board on Compliance
and Governance principles and ensures appropriate recording of minutes
of the meetings.
With a view to leverage technology and reducing paper consumption, the
Company has adopted a web-based application for transmitting Board /
Committee Agenda and Pre-reads. The Directors of the Company receive
the Agenda and Pre-reads in electronic form through this application,
which can be accessed through Browsers or iPads. The application meets
high standards of security and integrity that is required for storage and
transmission of Board / Committee Agenda and Pre-reads in electronic form.
Separate Independent Directors Meetings
The Independent Directors meet at least once in a quarter, without the
presence of Executive Directors or Management representatives. They
also have a separate meeting with the Non-Executive Chairman, to discuss
issues and concerns, if any.

The Independent Directors met four times during the financial year ended
31st March, 2017 on 9th May, 2016, 18th July, 2016, 26th October, 2016,
23rd January, 2017 and inter alia discussed:
the performance of Non-Independent Directors and the Board as a whole;
the performance of the Chairman of the Company, taking into account
the views of Executive Directors and Non-Executive Directors;
the quality, quantity and timeliness of flow of information between the
Company management and the Board that is necessary for the Board
to effectively and reasonably perform their duties; and
other matters arising out of Board / Committee(s) deliberations.
In addition to these formal meetings, interactions outside the Board
meetings also take place between the Chairman and Independent Directors.
Directors Induction and Familiarization
The Board familiarization program comprises of the following :
Induction program for new Independent Directors;
Immersion sessions on business and functional issues;
Strategy session
All new Independent Directors are taken through a detailed induction
and familiarization program when they join the Board of your Company.
The induction program is an exhaustive one that covers the history and
culture of Unilever, background of the Company and its growth over the last
several decades, various milestones in the Companys existence since its
incorporation, the present structure and an overview of the businesses and
functions. The program also covers the Unilever Sustainable Living Plan.
As part of the induction sessions, the Managing Director and
Chief Executive Officer provides an overview of the organisation its
history, culture, values and purpose. The Business and Functional Heads
take the Independent Directors through their respective businesses and
functions. The Independent Directors are also inducted through factory
and market visits to understand the operations of the Company. The
Independent Directors are also exposed to the constitution, Board
procedures, matters reserved for the Board and major risks facing
the business and mitigation programs. The Independent Directors are
also made aware of their roles and responsibilities at the time of their
appointment and a detailed Letter of Appointment is issued to them.
In the Board meetings, immersion sessions deal with different parts of
the business and bring out all facets of the business besides the shape
of the business. These immersion sessions provide a good understanding
of the business to the Independent Directors. Similar immersion sessions
are also convened for various functions of the Company. These sessions
are also an opportunity for the Board to interact with the next level
of management. To make these sessions meaningful and insightful,
pre-reads are circulated in advance. Deep dive sessions are also organised
on specific subjects for better appreciation by the Board of its impact on
the business. There are opportunities for Independent Directors to interact
amongst themselves every quarter. Many themes for such immersion
sessions come through on account of these structured interactions and
meetings of Independent Directors. The process of Board Evaluation
also throws up areas where the Board desires deep dive sessions. In the
financial year 2016-17, deep dive sessions on rural part of our business,
statutory environment in which the Company operates were organised for
better understanding of the Board of the implications on business.
Every year, a two day Strategy session is organised generally at a location
where the Company has an office or an establishment. It provides to the
Board an opportunity to understand Companys footprint in that market and
also interact with the Companys team in that market. The strategy session
focuses on the strategy for the future and covers all parts of the business
and functions, the course corrections, if any, required to be undertaken and
gives a good perspective of the future opportunities and challenges.
The details of training program attended by Independent Directors is available
on the website at https://www.hul.co.in/investor-relations/corporate-governance/.
Overview Reports Financial Statements 51
Board Evaluation
In terms of the requirement of the Companies Act, 2013 and the
Listing Regulations, an annual performance evaluation of the Board was
undertaken. During the year, the Board undertook the process of evaluation
through discussions and made an oral assessment of its functioning. The
Board had, during the year, opportunities to interact and make an assessment
of its functioning as a collective body. In addition, there were opportunities
for Committees to interact, for Independent Directors to interact amongst
themselves and for each Independent Director to interact with the Chairman.
The Board found there was considerable value and richness in such
discussions and deliberations.
The Board Evaluation discussion was focused around how to make the Board
more effective as a collective body in the context of the business and the
external environment in which the Company functions. From time to time
during the year, the Board was appraised of the business issues and the
related opportunities and risks. The Board discussed various aspects of the
functioning of the Board and its Committees such as structure, composition,
meetings, functions and interaction with Management and what needs
to be done to further improve the effectiveness of the Boards functioning.
Additionally, during the evaluation discussion, the Board also focused on the
contribution being made by the Board as a whole, through Committees and
discussions on a one on one basis with the Chairman.
The process of Board Evaluation through oral assessment was led by
the Non-Executive Chairman and the Chairman of the Nomination and
Remuneration Committee. The overall assessment of the Board was that it
was functioning as a cohesive body including the Committees of the Board
that were functioning well with periodic reporting by the Committees to
the Board on the work done and progress made during the period. The
Board also noted that the actions identified in the past questionnaire based
evaluations had been acted upon. Subsequent to the evaluation done in
the financial year 2016-17, given the changing external environment, some
areas have been identified for the Board to engage itself with and these will
be acted upon.
COMMITTEES OF THE BOARD
The Board Committees play a crucial role in the governance
structure of the Company and have been constituted to deal with
specific areas / activities which concern the Company and need a closer
review. The Board Committees are set up under the formal approval of
the Board to carry out clearly defined roles which are considered to be
performed by members of the Board, as a part of good governance practice.
The Board supervises the execution of its responsibilities by the Committees
and is responsible for their action. The Chairman of the respective
Committee informs the Board about the summary of the discussions held
in the Committee Meetings. The minutes of the meetings of all Committees
are placed before the Board for review. The Board Committees can request
special invitees to join the meeting, as appropriate.
The Board has currently established the following statutory and
non-statutory Committees.
Audit Committee
The Companys Audit Committee comprises all the five Independent
Directors. The Audit Committee is headed by Mr. Aditya Narayan
and has Mr. S. Ramadorai, Mr. O. P. Bhatt, Dr. Sanjiv Misra and
Ms. Kalpana Morparia as its members. All the members of the Committee
have relevant experience in financial matters.
The Audit Committee of the Company is entrusted with the responsibility to
supervise the Companys internal controls and financial reporting process
and, inter alia, performs the following functions:
overseeing the Companys financial reporting process and disclosure
of financial information to ensure that the financial statements are
correct, sufficient and credible;
reviewing and examining with management the quarterly financial
results before submission to the Board for approval;
Annual Report 2016-17 Hindustan Unilever Limited
52 Corporate Governance
reviewing and examining with management the annual financial
statements and the auditors report thereon before submission to the
Board for its approval;
reviewing management discussion and analysis of financial condition
and results of operations;
scrutinising of inter-corporate loans and investments made by the
Company;
reviewing with management the annual financial statements as well
as investments made by the unlisted subsidiary companies;
reviewing, approving or subsequently modifying any Related Party
Transactions in accordance with the Related Party Transaction Policy
of the Company;
approving the appointment of Chief Financial Officer after assessing
the qualifications, experience and background, etc. of the candidate;
recommending the appointment, remuneration and terms of
appointment of Statutory Auditors of the Company and approval for
payment of any other services;
reviewing and monitoring the auditors independence and
performance, and effectiveness of audit process;
reviewing management letters / letters of internal control weaknesses
issued by the Statutory Auditors;
discussing with Statutory Auditors, before the commencement of
audit, on the nature and scope of audit as well as having post-audit
discussion to ascertain area of concern, if any;
reviewing with management, Statutory Auditors and Internal Auditor,
the adequacy of internal control systems;
reviewing the financial statements, in particular, the investments
made by the unlisted subsidiaries;
recommending appointment, remuneration and terms of appointment
of Internal Auditor of the Company;
reviewing the adequacy of internal audit function and discussing with
Internal Auditor any significant finding and reviewing the progress of
corrective actions on such issues;
evaluating internal financial controls and risk management systems;
valuating undertaking or assets of the Company, wherever it is necessary;
reviewing the functioning of the Whistle Blowing mechanism;
reviewing the progress made on cases that are reported under the
Code of Business Principles of the Company and implication of these
cases, if any, under the UK Bribery Act, 2011.
The Committee is governed by the terms of reference which are in line with
the regulatory requirements mandated by the Act and Listing Regulations.
The Audit Committee ensures that it has reviewed each area that it is
required to review under its terms of reference and under applicable
legislation or by way of good practice. This periodic review ensures that
all areas within the scope of the Committee are reviewed.
In addition to quarterly meetings for consideration of financial results,
special meetings of the Audit Committee are convened. In these meetings,
the Audit Committee reviews various businesses / functions, business
risk assessment, controls and critical IT applications with implications of
security and internal audit and control assurance reports of all the
major divisions of the Company. The Audit Committee also reviews the
functioning of the Code of Business Principles and Whistle Blower Policy
of the Company and cases reported thereunder. The recommendations of
Audit Committee are duly approved and accepted by the Board.
The meetings of Audit Committee are also attended by the
Chief Executive Officer, Chief Financial Officer, Statutory Auditors and
Internal Auditor as special invitees. The Company Secretary acts as
the Secretary to the Committee. The minutes of each Audit Committee
meeting are placed in the next meeting of the Board. The Audit Committee
also meets the internal and external auditors separately, without the
presence of Management representatives.
Hindustan Unilever Limited Annual Report 2016-17
The Audit Committee met six times during the financial year ended
31st March, 2017 on 9th May, 2016, 1st July, 2016, 18th July, 2016,
26th October, 2016, 23rd December, 2016 and 23rd January, 2017.
Internal Controls and Risk Management
The Company has robust systems for internal audit and corporate risk
assessment and mitigation. The Company has an independent Control
Assurance Department (CAD) assisted by dedicated outsourced audit teams.
The Internal Audit covers all the factories, sales offices, warehouses and
centrally controlled businesses and functions, as per the annual plan agreed
with the Audit Committee. The audit coverage plan of CAD is approved by
the Audit Committee at the beginning of every year. Every quarter, the Audit
Committee of the Board is presented with key control issues and actions taken
on the issues highlighted in previous report.
Business Risk Assessment procedures have been set in place for
self-assessment of business risks, operating controls and compliance with
Corporate Policies. There is an ongoing process to track the evolution of risks
and delivery of mitigating action plans.
The Companys internal financial control framework, established in
accordance with the COSO framework, is commensurate with the size
and operations of the business and is in line with requirements of the
Act. The Companys internal financial controls framework is based on
the three lines of defense model. The Company has laid down standard
operating procedures and policies to guide the operations of the business.
Unit heads are responsible to ensure compliance with the policies and
procedures laid down by the management. Robust and continuous
internal monitoring mechanisms ensure timely identification of risks
and issues. The management, Statutory and Internal Auditors undertake
rigorous testing of the control environment of the Company.
The Audit Committee in its meeting held on 17th May, 2017 appointed
Ms. Subhra Gourisaria as Internal Auditor of the Company replacing
Mr. V. Hariharan who was the Internal Auditor during the financial year
2016-17.
Nomination and Remuneration Committee
The Nomination and Remuneration Committee comprises Mr. S. Ramadorai
as the Chairman and Mr. Aditya Narayan, Mr. O. P. Bhatt, Dr. Sanjiv Misra and
Mr. Harish Manwani as members of the Committee.
The role of Nomination and Remuneration Committee is as follows:
Determine / recommend the criteria for appointment of Executive,
Non-Executive and Independent Directors to the Board;
Determine / recommend the criteria for qualifications, positive
attributes and independence of Director;
Identify candidates who are qualified to become Directors and who
may be appointed in the Management Committee and recommend to
the Board their appointment and removal;
Review and determine all elements of remuneration package of all
the Executive Directors, i.e. salary, benefits, bonuses, stock options,
pension etc;
Review and determine fixed component and performance linked
incentives for Directors, along with the performance criteria;
Determine policy on service contracts, notice period, severance fees
for Directors and Senior Management;
Formulate criteria and carry out evaluation of each Directors
performance and performance of the Board as a whole.
The Committee also plays the role of Compensation Committee and is
responsible for administering the Stock Option Plan and Performance Share
Plan of the Company and determining eligibility of employees for stock options.
The Nomination and Remuneration Committee met four times during the
financial year ended 31st March, 2017 on 9th May, 2016, 18th July, 2016,
23rd January, 2017 and 27th February, 2017.

Board Membership Criteria
The Board of Directors are collectively responsible for selection of a
member on the Board. The Nomination and Remuneration Committee
of the Company follows a defined criteria for identifying, screening,
recruiting and recommending candidates for election as a Director on the
Board. The criteria for appointment to the Board include:
composition of the Board, which is commensurate with the size of the
Company, its portfolio, geographical spread and its status as a listed
Company;
desired age and diversity on the Board;
size of the Board with optimal balance of skills and experience and
balance of Executive and Non-Executive Directors consistent with the
requirements of law;
professional qualifications, expertise and experience in specific area
of relevance to the Company;
balance of skills and expertise in view of the objectives and activities
of the Company;
avoidance of any present or potential conflict of interest;
availability of time and other commitments for proper performance of
duties;
personal characteristics being in line with the Companys values,
such as integrity, honesty, transparency, pioneering mindset.
Reward Policy
The Reward philosophy of the Company is to provide market competitive
total reward opportunity that has a strong linkage to and reinforces the
performance culture of the Company. This philosophy is set forth into practice
by various policies governing the different elements of total reward. The intent
of all these policies is to ensure that the principles of reward philosophy are
followed in entirety, thereby facilitating the Company to recruit and retain
the best talent. The ultimate objective is to gain competitive advantage by
creating a reward proposition that inspires employees to deliver Companys
promise to consumers and achieve superior operational results.
The guiding principles for Companys reward policies / practices are as follows:
1. Open, Fair and Consistent: increase transparency and ensure fairness
and consistency in Reward framework.
2. Insight and Engagement: make Reward truly relevant to the
employees by using leading edge tools that help the Company hear
how employees feel about their Reward.
3. Innovation: continuously improve Companys Reward through
innovations based on insight, analytics and Unilevers expertise.
4. Simplicity, Speed and Accuracy: simplify reward plans and processes and
deliver the information employees need quickly, clearly and efficiently.
5. Business Results: Companys business results are the ultimate test
of whether Reward solutions are effective and sustainable.
During the year, a detailed review of the Reward Framework was undertaken
on the basis of the following key principles:
Simplify reward;
Ensure consistent alignment of performance measures with
Companys strategy; and
Increase the timeframe over which incentives are delivered.
Particulars
Fixed Commission:
Base Fixed Commission for Independent Directors
Additional Variable Commission:
Corresponding to the percentage of attendance at all the Board and Committee Meeting(s)
In the capacity of Chairperson of the Committee(s)*
In the capacity of Member of the Committee(s)*
*Committee includes Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility Committee.
Overview Reports Financial Statements 53
In light of this, the Reward Framework for senior leadership team
including Executive Directors, Key Managerial Personnel and
Management Committee members is undergoing a change. The salary
structure is being simplified to ensure fewer elements and clear linkage
to employee performance.
The appointment of Executive Directors, Key Managerial Personnel,
Management Committee members and other employees is by virtue
of their employment with the Company as management employees
and therefore, their terms of employment vis--vis salary, variable pay,
service contract, notice period and severance fee, if any, are governed
by the applicable policies at the relevant point in time. The total reward
for Executive Directors, Key Managerial Personnel and Management
Committee members is reviewed and approved by the Nomination
and Remuneration Committee annually, taking into account external
benchmarks within the context of group and individual performance.
A fair portion of Executive Directors total reward is linked to Companys
performance. This creates alignment with the strategy and business
priorities to enhance shareholder value. Long term incentives,
in the form of Management Co-Investment Plan, seek to reward
Executive Directors, Management Committee members and other
eligible employees by aligning their deliverables to business results. This
program has been further strengthened as part of the review exercise for
Executive Directors, Key Managerial Personnel and senior management
employees of the Company.
In line with the Evaluation Policy of the Company, the Nomination
and Remuneration Committee considers the outcome of the annual
Evaluation before recommending the changes in the remuneration of the
Executive Directors and appointment / re-appointment of Directors.
Non-Executive Independent Directors are eligible for sitting fees
and commission not exceeding the limits prescribed under the
Companies Act, 2013. The remuneration payable to Non-Executive
Directors is decided by the Board of Directors subject to the approval of
Members of the Company.
Independent Directors are currently paid sitting fees of ` 30,000/- for
attending every meeting of the Board or Committee thereof. In line
with the globally accepted governance practices, the Board of Directors
adopted a Differential Remuneration Policy for Non-Executive
Directors remuneration which is also available at Companys website at
https://www.hul.co.in/investor-relations/corporate-governance/. As per
the Differential Remuneration Policy, Non-Executive Independent Directors
are entitled to fixed commission on profits at the rate of ` 15 lakhs for
each financial year. In addition, Non-Executive Independent Directors are
entitled to a remuneration linked to their attendance at the meetings of
the Board or Committees thereof and also on the basis of their position in
various Committees of the Board, whether that of a Chairman or a member
of the Committee(s).
The remuneration payable to the Independent Directors under
the Differential Remuneration Policy in within the overall limit of
` 300 lakhs, as approved by the Members at the Annual General Meeting
held on 29th June, 2015. The criteria adopted by the Company for
Differential Remuneration Policy is as under:
(` Lakhs)
Commission (p.a.)
15.00
5.00
2.00
1.00
Annual Report 2016-17 Hindustan Unilever Limited
54 Corporate Governance

The Non-Executive Directors, who continuously serve minimum two
terms of five years each, are also entitled to one time commission of
` 10 lakhs at the time of stepping down from the Board.
During the year, there were no pecuniary relationships or transactions
between the Company and any of its Non-Executive Directors apart
from sitting fees and commission. The Company has not granted any
stock options to any of its Non-Executive Independent Directors.
The details of remuneration paid, stock options and conditional grants made
to Executive Directors and remuneration paid to Non-Executive Directors
for the financial year ended 31st March, 2017 are provided hereinafter:

Details of Remuneration of Executive Directors for the financial year ended 31st March, 2017
(` Lakhs)
Salary and
Name Bonus Perquisites Contribution to PF Pension Total
Allowances
Sanjiv Mehta 752 227 416 25 - 1,420
P. B. Balaji 613 94 90 17 19 833
Pradeep Banerjee 212 84 143 17 19 475
Dev Bajpai* 248 78 111 15 17 469

Details of Conditional Grants of Performance Shares made to the Executive Directors

Name Performance Shares Performance Shares Grant under Performance Performance Shares
outstanding as at exercised during the Share Scheme during the year balance as at
31st March, 2016 year 31st March, 2017
Pradeep Banerjee 13,320** 9,275 1,800 5,845
Dev Bajpai* 20,235** 6,065 2,159 16,329
* Appointed as a Whole-time Director w.e.f. 23rd January, 2017. Remuneration given above also includes remuneration prior to the date of appointment as a Director, which
was paid to Mr .Dev Bajpai in the capacity of Key Managerial Personnel of the Company.
** Includes Vesting Adjustment.

Details of Remuneration of Non-Executive Directors for the financial year ended 31st March, 2017
(` Lakhs)
Name Sitting Fees* Commission# Total
Harish Manwani ##
- 62.00 62.00
Aditya Narayan 5.40 24.00 29.40
S. Ramadorai 4.50 22.69 27.19
O. P. Bhatt 6.00 26.00 32.00
Sanjiv Misra 5.40 23.00 28.40
Kalpana Morparia 4.20 22.00 26.20
* Includes sitting fees paid for Board and Board Committee meetings.
#
The Commission for the financial year ended 31st March, 2017 as per the Differential Remuneration Policy will be paid to Independent Directors, subject to deduction of tax,
after adoption of accounts by the shareholders at the Annual General Meeting to be held on 30th June, 2017.
##
In addition to Commission, the Non-Executive Chairman is entitled to reimbursement of expenses towards accommodation, travel, transport and business centre/club usage in
accordance with the approval of the Board within the overall limits approved by the shareholders of the Company.

Corporate Social Responsibility Committee
The Corporate Social Responsibility Committee comprises
Mr. O. P. Bhatt as the Chairman and Mr. Aditya Narayan, Dr. Sanjiv Misra,
Ms. Kalpana Morparia, Mr. Sanjiv Mehta and Mr. P. B. Balaji as the
members of the Committee.
The role of Corporate Social Responsibility Committee is as follows:
formulating and recommending to the Board the CSR Policy and
activities to be undertaken by the Company;
recommending the amount of expenditure to be incurred on
CSR activities of the Company;
reviewing the performance of Company in the area of CSR;
providing external and independent oversight and guidance on the
environmental and social impact of how the Company conducts its
business;
monitoring CSR Policy of the Company from time to time;
monitoring the implementation of the CSR projects or programs or
activities undertaken by the Company.
During the financial year ended 31st March, 2017, the Committee met
twice on 9th May, 2016 and 23rd December, 2016.
Stakeholders Relationship Committee
The Stakeholders Relationship Committee comprises Mr. O. P. Bhatt,
Independent Director as the Chairman and Mr. Sanjiv Mehta and
Mr. P. B. Balaji, as members of the Committee.
The role of Stakeholders Relationship Committee is as follows:
consider and resolve the grievances of shareholders of the Company
with respect to transfer of shares, non-receipt of annual report,
non-receipt of declared dividend, etc;
ensure expeditious share transfer process in line with the proceedings
of the Share Transfer Committee;
evaluate performance and service standards of the Registrar and
Share Transfer Agent of the Company;
provide guidance and make recommendations to improve investor
service levels for the investors.
The Committee has periodic interaction with the representatives of the
Registrar and Transfer Agent of the Company.

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 55

During the year, the Committee had specifically reviewed the risks and TREND OF COMPLAINTS RECEIVED DURING LAST
controls processes being followed by Karvy Computershare Private
Limited (Karvy), the Registrar and Share Transfer Agent of the Company. 5 YEARS:
Karvy had conducted an external Audit on RTA operations for which a
detailed Report was shared with the Committee.
Non-receipt of Dividend
During the financial year ended 31st March, 2017, the Committee met
twice on 9th May, 2016 and 23rd December, 2016. Non-receipt of shares lodged for transfer
Others
Details of Shareholders / Investors Complaints
Mr. Dev Bajpai, Executive Director (Legal & Corporate Affairs) and Company
Secretary, is the Compliance Officer for resolution of Shareholders /
Investors complaints. During the financial year ended 31st March, 2017,
66 complaints were received from the shareholders. All complaints have 35
been redressed to the satisfaction of the shareholders and none of them 19 17
were pending as on 31st March, 2017. 38
15
Complaints Complaints 42
Particulars 45 47
Received Redressed 27

Non-Receipt of Dividend 15 15 37

Non-Receipt of Shares lodged for Transfer 27 27 21 24

17 17
6
Others (e.g. non-receipt of Annual Report) 24 24
TOTAL 66 66 2012-13 2013-14 2014-15 2015-16 2016-17

Risk Management Committee Committee for Allotment of Shares under ESOPs

The Risk Management Committee of the Company comprises of
Mr. Sanjiv Mehta as the Chairman and Mr. P. B. Balaji, Mr. Pradeep Banerjee,
Mr. Dev Bajpai and Mr. V. Hariharan as members of the Committee. The
Board of Directors in their meeting held on 17th May, 2017 appointed
Mr. Aasif Malbari, Group Controller as member of the Risk Management
Committee replacing Mr. V. Hariharan, who was acting as member of the
Committee during the financial year 2016-17.
The role of Risk Management Committee is to:
oversee the implementation of Risk Management Systems and
Framework;
review the Companys financial and risk management policies;
assess risk and procedures to minimise the same;
frame, implementing and monitoring the risk management plan for
the Company.
During the financial year ended 31st March, 2017, the Risk Management
Committee met twice on 15th December, 2016 and 21st March, 2017 for
reviewing the Company level risks and mitigation plans and actions.
Share Transfer / Transmission Committee
The Share Transfer / Transmission Committee has been formed to look
into share transfer and related applications received from shareholders,
with a view to accelerate the transfer procedures.
The Committee comprises three Executive Directors of the Board. The
Committee inter alia considers applications for transfer, transmission,
split, consolidation of share certificates and cancellation of any share
certificate in compliance with the provisions in this regard. The Committee
is authorised to sign, seal or issue any new share certificate as a result
of transfer, consolidation, splitting or in lieu of share certificates lost,
defaced or destroyed.
The Committee meets generally on a weekly basis to ensure that share
transfers, and other related requests are registered and returned within
a period of 15 days from the date of receipt, provided the documents are
complete in all respects.
The Committee for Allotment of Shares under ESOPs has been constituted
for approval, issue and allotment of shares under ESOP Schemes.
The Committee comprises three Executive Directors of the Board and
is constituted to expedite the process of allotment and issue of eligible
shares to the employees under the Stock Option Plan of the Company.
Other Functional Committees
Apart from the above statutory Committees, the Board of Directors has
constituted the following Functional Committees to raise the level of
governance as also to meet the specific business needs.
Routine Business Matter Committee
The Routine Business Matter Committee has been set up to oversee routine
operations that arise in the normal course of the business, such as decision
on banking relations, delegation of operational powers, appointment
of nominees under statutes, etc. The Committee comprises three
Executive Directors of the Board. The Committee reports to the Board
and the minutes of these meetings are placed before the Board for
information.
Committee for approving Disposal of Surplus Assets
The Committee for approving Disposal of Surplus Assets has been set
up and entrusted with the responsibility of identifying the surplus assets
of the Company and to authorise sale and disposal of such surplus
property.
The Committee is fully authorised to take necessary steps to give effect
to sale and transfer of the ownership rights, interest and title in the said
property, for and on behalf of the Company. The Committee comprises
three Executive Directors of the Board. The Committee reports to the
Board and minutes of these meetings are placed before the Board for
information.

Annual Report 2016-17 Hindustan Unilever Limited

56 Corporate Governance

Attendance of Directors / Members at Board and Committee Meeting(s)

The following table shows attendance of Directors at the Board and Members of the statutory Committee meeting(s) for the year ended
31st March, 2017. Attendance is presented as number of meeting(s) attended, (including meetings attended through electronic mode) out of the number
of meeting(s) required to be attended.

Name Board Audit Nomination and Stakeholders Corporate Social Risk Management
Meeting Committee Remuneration Relationship Responsibility Committee
Committee Committee Committee
Harish Manwani 6 of 6# - 4 of 4 - -
Sanjiv Mehta 5 of 6 - - 1 of 2 1 of 2 2 of 2#
P. B. Balaji 6 of 6 - - 2 of 2 2 of 2 2 of 2
Pradeep Banerjee 6 of 6 - - - - 2 of 2
Aditya Narayan 6 of 6 6 of 6# 4 of 4 - 2 of 2 -
S. Ramadorai 5 of 6 6 of 6 4 of 4# - - -
O. P. Bhatt 6 of 6 6 of 6 4 of 4 2 of 2# 2 of 2# -
Sanjiv Misra 6 of 6 6 of 6 4 of 4 - 2 of 2 -
Kalpana Morparia 6 of 6 6 of 6 - - 2 of 2 -
Dev Bajpai* 1 of 1 - - - - 2 of 2
V. Hariharan - - - - - 1 of 2
# Chairman
* Appointed as member of the Board with effect from 23rd January, 2017.
In addition to the meetings attended, Mr. Sanjiv Mehta participated in the meeting held on 23rd December, 2016 for specific business item over the phone.
The last Annual General Meeting of the Company held on 30th June, 2016 was attended by all members of the Board of Directors.

GOVERNANCE OF SUBSIDIARY COMPANIES
The minutes of the Board Meetings of the subsidiary companies along with
the details of significant transactions and arrangements entered into by the
subsidiary companies are shared with the Board of Directors on a quarterly
basis. The financial statements of the subsidiary companies are presented to
the Audit Committee. The Company does not have a material subsidiary as on
the date of this report, having a net worth exceeding 20% of the consolidated
net worth or income of 20% of the consolidated income of your Company.
The information in respect of the loans and advances in the nature of loans to
subsidiaries pursuant to Regulation 34 of the Listing Regulations is provided
in Notes to the standalone financial statements.
COMPANY POLICIES
Code of Business Principles / Whistle Blower Policy
The Code of Business Principles (CoBP) is the Companys statement of values
and represents the standard of conduct which all employees are expected
to observe in their business endeavours. The Code reflects the Companys
commitment to principles of integrity, transparency and fairness. It forms the
benchmark against which the world at large is invited to judge the Companys
activities. The copy of the Code of Business Principles is available on the website
of the Company https://www.hul.co.in/about/who-we-are/purpose-and-principles/.
The Company has adopted a Whistle Blower Policy, as part of vigil
mechanism to provide appropriate avenues to the Directors and
employees to bring to the attention of the management any issue which
is perceived to be in violation of or in conflict with the Code of Business
Principles of the Company. The Company has provided dedicated e-mail
addresses whistleblowing.hul@unilever.com and cobp.hul@unilever.com
for reporting such concerns. Alternatively, employees can also send written
communications to the Company. The employees are encouraged to voice
their concerns by way of whistle blowing and all the employees have been
given access to the Audit Committee. No personnel have been denied
access to the Audit Committee pertaining to the Whistle Blower Policy. The
Company Secretary is the designated officer for effective implementation
of the policy and dealing with the complaints registered under the policy.
All cases registered under the Code of Business Principles and the
Hindustan Unilever Limited Annual Report 2016-17
Whistle Blower Policy of the Company, are reported to the Management
Committee and are subject to the review of the Audit Committee.
The Whistle Blower Policy is available on the website of the Company
https://www.hul.co.in/investor-relations/corporate-governance/
Preventing Conflict of Interest
The Board of Directors is responsible for ensuring that rules are in place
to avoid conflict of interest by the Board members and the Management
Committee. The Board has adopted the Code of Conduct for the members
of the Board and Senior Management Team. The Code provides that the
Directors are required to avoid any interest in contracts entered into
by the Company. If such an interest exists, they are required to make
adequate disclosure to the Board and to abstain from discussion, voting or
otherwise influencing the decision on any matter in which the concerned
Director has or may have such interest. The Code also restricts Directors
from accepting any gifts or incentives in their capacity as a Director of the
Company, except what is duly authorised under the Companys Gift Policy.
The members of the Board and the Management Committee annually
confirm the compliance of the Code of Conduct to the Board. The Code of
Conduct is in addition to the Code of Business Principles of the Company.
A copy of the said Code of Conduct is available on the website of the
Company https://www.hul.co.in/investor-relations/corporate-governance/.
In addition, members of the Board and Management Committee also
submit, on an annual basis, the details of individuals to whom they are
related and entities in which they hold interest and such disclosures are
placed before the Board. The members of the Board inform the Company of
any change in their Directorship(s), chairmanship(s)/membership(s) of the
Committees, in accordance with the requirements of the Companies Act,
2013 and Listing Regulations. Transactions with any of the entities referred
above are placed before the Board for approval. Details of all Related Party
Transactions are placed before the Audit Committee on quarterly basis.
Policy on dealing with Related Party Transactions
The Company has not entered into any material Related Party Transaction
during the year. In line with requirement of the Companies Act, 2013 and
Listing Regulations, your Company has formulated a Policy on Related Party
Transactions which is also available at Companys website under the weblink:
https://www.hul.co.in/investor-relations/corporate-governance/.

The Policy intends to ensure that proper reporting, approval and disclosure
processes are in place for all transactions between the Company and
Related Parties.
This policy specifically deals with the review and approval of Material
Related Party Transactions keeping in mind the potential or actual
conflicts of interest that may arise because of entering into these
transactions. All Related Party Transactions are placed before the Audit
Committee for review and approval. Prior omnibus approval is obtained
for Related Party Transactions on a quarterly basis for transactions which
are of repetitive nature and / or entered in the ordinary course of business
and are at Arms Length. All Related Party Transactions entered during
the year were in Ordinary Course of the business and on Arms Length
basis. No Material Related Party Transactions, i.e. transactions exceeding
ten percent of the annual consolidated turnover as per the last audited
financial statements, were entered during the year by your Company.
Policy on Material Subsidiary
The Company has adopted a Policy on Material Subsidiary in line with the
requirements of the Listing Regulations. The objective of this policy is to lay
down criteria for identification and dealing with material subsidiaries and
to formulate a governance framework for subsidiaries of the Company. The
policy on Material Subsidiary is available on the website of the Company under
the weblink: https://www.hul.co.in/investor-relations/corporate-governance/
Policy on Dividend Distribution
The Company has adopted Dividend Distribution Policy in terms of the requirement,
of Listing Regulations. The Policy is available on the website of the Company
under the weblink https://www.hul.co.in/investor-relations/corporate-governance/.
The Dividend Distribution Policy forms a part of this Report.
Share Dealing Code
The Company has instituted a mechanism to avoid Insider Trading and
abusive self-dealing in the securities of the Company. In accordance with the
SEBI Regulations as amended, the Company has established systems and
procedures to prohibit insider trading activity and has framed a Share Dealing
Code. The Share Dealing Code of the Company prohibits the Directors of
the Company and other specified employees dealing in the securities of
the Company on the basis of any unpublished price sensitive information,
available to them by virtue of their position in the Company. The objective of
this Code is to prevent misuse of any unpublished price sensitive information
and prohibit any insider trading activity, in order to protect the interest of the
shareholders at large.
The Board of Directors of the Company have adopted a new Share
Dealing Code and formulated the Code of Practices and Procedures for
Fair Disclosure in terms of the requirements of SEBI (Prohibition of
Insider Trading) Regulations, 2015.
The details of dealing in Companys shares by Specified Employees (which
include members of the Management Committee and Directors) are
placed before the Board for information on quarterly basis.
The Code also prescribes sanction framework and any instance of breach of Code
is dealt with in accordance with the same. A copy of the Share Dealing Code of
the Company is made available to all employees of the Company and compliance
of the same is ensured. The Share Dealing Code is available on the website of
the Company https://www.hul.co.in/investor-relations/corporate-governance/.
UN Global Compact
Unilever is a signatory to the United Nations Global Compact Programme
and is fully committed to the principles of the UN Global Compact which
covers human rights, labour practices, environment commitment and
prevention of corruption in business organisations. The UN Global Compact
is a symbol of leadership in a complex business world and provides a
forward looking forum in which the United Nations, companies and civil
society organisations can come together in an open and transparent
dialogue. The Companys Code of Business Principles upholds the ideals
of UN Global Compact in all aspects of its business operations.
Overview Reports Financial Statements 57
AFFIRMATION AND DISCLOSURE
All the members of the Board and the Management Committee have
affirmed their compliance with the Code of Conduct as on 31st March,
2017 and a declaration to that effect, signed by the Managing Director and
Chief Executive Officer (CEO), is attached and forms part of this Report.
The members of the Management Committee have made disclosure to
the Board of Directors relating to transactions with potential conflict
of interest with the Company. There were no material, financial or
commercial transaction, between the Company and members of the
Management Committee that may have a potential conflict with the
interest of the Company at large.
All details relating to financial and commercial transactions where Directors
may have a pecuniary interest are provided to the Board and the interested
Directors neither participate in the discussion nor vote on such matters.
The Company has complied with the requirements specified in
Regulations 17 to 27 and clauses (b) to (i) of the Regulation 46(2) of the
Listing Regulations.
Disclosure on Website
The following information has been disseminated on the website of the
Company at www.hul.co.in;
1. Details of business of the Company
2. Terms and conditions of appointment of Independent Directors
3. Composition of various Committees of Board of Directors
4. Code of Conduct for Board of Directors and Senior Management
Personnel
5. Details of establishment of vigil mechanism/Whistle Blower policy
6. Criteria of making payments to Non-Executive Directors
7. Policy on dealing with Related Party Transactions
8. Policy for determining material subsidiaries
9. Details of familiarization programmes imparted to Independent
Directors
10. Policy for determination of materiality of events
11. Policy for Dividend Distribution
Disclosure of Pending Cases / Instances of
Non-Compliance
There were no non-compliances by the Company and no instances of
penalties and strictures imposed on the Company by the Stock Exchanges
or SEBI or any other statutory authority on any matter related to the capital
market during the last three years.
The Company has been impleaded in certain legal cases related to disputes
over title to shares arising in the ordinary course of share transfer operations.
However, none of these cases are material in nature, which may lead to
material loss or expenditure to the Company.
Commodity Price Risk / Foreign Exchange Risk
and Hedging Activities
Commodities form a major part of the raw materials required for Companys
products portfolio and hence commodity price risk is one of the important
market risk for the Company. The commodities are priced using pricing
benchmarks and commodity derivatives are priced using exchange-traded
pricing benchmarks. Your Company has a robust framework and governance
mechanism in place to ensure that the organisation is adequately protected
from the market volatility in terms of price and availability.
The Commodity Risk Management (CRM) team of Unilever, based on
intelligence and monitoring, forecasts commodity prices and movements
and advises the Procurement team on cover strategy. A robust planning
and strategy ensure that Companys interests are protected despite
volatility in commodity prices.
Annual Report 2016-17 Hindustan Unilever Limited
58 Corporate Governance

Your Company has managed the foreign exchange risk with appropriate
hedging activities in accordance with policies of the Company. The aim of
the Companys approach to manage currency risk is to leave the Company
with the no material residual risk. The Company uses forward exchange
contracts to hedge against its foreign currency exposures relating to firm
commitment. Foreign exchange transactions are fully covered with strict
limits placed on the amount of uncovered exposure, if any, at any point
in time. There are no materially uncovered exchange rate risks in the
context of the Companys imports and exports. The Company does not
enter into any derivative instruments for trading or speculative purposes.
The details of foreign exchange exposures as on 31st March, 2017 are
disclosed in Notes to the standalone financial statements.
Compliance with the Discretionary Requirements under
Listing Regulations
The Board of Directors periodically reviewed the compliance of all applicable
laws and steps taken by the Company to rectify instances of non-compliance,
if any. The Company is in compliance with all mandatory requirements of
Listing Regulations. In addition, the Company has also adopted the following
non-mandatory requirements to the extent mentioned below:
The Board & separate posts of Chairman and CEO: The positions
of the Chairman and the CEO are separate. Mr. Harish Manwani,
Non-Executive Chairman of the Company maintains office at the
Companys expense and is allowed reimbursement of expenses
incurred in performance of his duties.
Shareholders rights: The quarterly results along with the
press release are uploaded on the website of the Company
https://www.hul.co.in/investor-relations/quarterly-results/. The soft
copy of the quarterly results is also sent to the shareholders who have
registered their e-mail addresses.
Audit qualifications: Companys financial statements are unqualified.
Reporting of Internal Auditor: The Internal Auditor of the Company
directly reports to the Audit Committee on functional matters.
The Company has submitted quarterly compliance report on Corporate
Governance with the Stock Exchanges, in accordance with the
requirements of Regulation 27(2)(a) of the Listing Regulations.
Secretarial Audit Report
The Company has undertaken Secretarial Audit for the financial year
2016-17 which, inter alia, includes audit of compliance with the Companies
Act, 2013, and the Rules made under the Act, Listing Regulations and
applicable Regulations prescribed by the Securities and Exchange
Board of India and Foreign Exchange Management Act, 1999 and
Secretarial Standards issued by the Institute of the Company Secretaries
of India. The Secretarial Audit Report forms part of this Annual Report.
Corporate Governance Code Audit
The Board of Directors has adopted Corporate Governance Code for the
Company which is a statement of practices and procedures to be followed
by the Company. The copy of the Code is available on Companys website
https://www.hul.co.in/investor-relations/corporate-governance/.
The Company had appointed M/s. S. N. Ananthasubramanian and Co.,
a firm of Company Secretaries as the Auditor for the audit of the practices
and procedures followed by the Company under the Code. The Company has
received the Corporate Governance Audit Report for the financial year 2016-17.

SHAREHOLDER INFORMATION
General Body Meetings
Details of last three Annual General Meetings and the summary of Special Resolutions passed therein are as under:

Financial year ended Date and Time Venue Special resolutions passed
31st March, 2014 30th June, 2014 Unilever House, B. D. Sawant Marg, No special resolutions were passed in this meeting
2.00 p.m. Chakala, Andheri (East),
Mumbai - 400 099
31st March, 2015 29th June, 2015 Same as above Increase in overall limit of remuneration payable to
2.00 p.m. Non-Executive Directors
Adoption of new Articles of Association of the Company
31st March, 2016 30th June, 2016 Same as above No special resolutions were passed in this meeting
3.30 p.m.

No special resolution was passed by the Company last year through Postal Ballot. No special resolution is proposed to be conducted through Postal Ballot
as on the date of this report.

Annual General Meeting for the financial year 2016-17

Date Friday, 30th June, 2017
Venue Unilever House, B. D. Sawant Marg, Chakala, Andheri (East), Mumbai - 400 099
Time 3.30 p.m.
Book Closure Dates for Final Dividend Saturday, 24th June, 2017 to Friday, 30th June, 2017 (both days inclusive)
Last date of receipt of Proxy Forms Wednesday, 28th June, 2017 before 3.30 p.m. at Registered Office of the Company

Calendar of financial year ended 31st March, 2017 Tentative Calendar for financial year ending 31st March, 2018
The Company follows April-March as the financial year. The meetings of The tentative dates of meeting of Board of Directors for consideration of
Board of Directors for approval of quarterly financial results during the quarterly financial results for the financial year ending 31st March, 2018
financial year ended 31st March, 2017 were held on the following dates: are as follows:

First Quarter Results 18th July, 2016 First Quarter Results 18th July, 2017
Second Quarter and Half yearly Results 26th October, 2016 Second Quarter and Half yearly Results 25th October, 2017
Third Quarter Results 23rd January, 2017 Third Quarter Results 22nd January, 2018
Fourth Quarter and Annual Results 17th May, 2017 Fourth Quarter and Annual Results 17th May, 2018

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 59

Dividend
The Board of Directors at their meeting held on 17th May, 2017,
recommended a Final Dividend of ` 10/- per equity share of face value of
` 1/- each, for the financial year ended 31st March, 2017. Together with the
Interim Dividend of ` 7.00 per equity share paid on 15 November, 2016, the
total dividend for the year works out to ` 17/- per equity share of face value
of ` 1/- each. Final Dividend, if approved by Members, will be paid on or
after Wednesday, 5th July, 2017.
Unpaid / Unclaimed Dividends
During the year under review, the Ministry of Corporate Affairs
notified provisions relating to unpaid / unclaimed dividends under
Sections 124 and 125 of Companies Act, 2013 and Investor Education and
Protection Fund (Accounting, Audit, Transfer and Refund) Rules. As per
the new Rules, dividends not encashed / claimed within seven years from
the date of declaration are to be transferred to the Investor Education
and Protection Fund (IEPF) Authority. The new IEPF Rules mandate
companies to transfer shares of shareholders whose dividends remain
unpaid / unclaimed for a continuous period of seven years to the demat
account of IEPF Authority. The shareholders whose dividend / shares are
transferred to the IEPF Authority can now claim their shares / dividend
from the Authority.
In accordance with the new IEPF Rules, the Company sent notice
to all shareholders whose shares are due to be transferred to the
IEPF Authority and published requisite advertisement in the newspaper.
In terms of the provisions of Investor Education and Protection Fund
(Accounting, Audit, Transfer and Refund) Rules, 2016 / Investor Education
and Protection Fund (Awareness and Protection of Investors) Rules, 2001,
` 5.43 crores of unpaid / unclaimed dividends were transferred during the
year to the Investor Education and Protection Fund.
The Company has uploaded the details of unpaid and unclaimed
amounts lying with the Company as on 30th June, 2016 (date of last
Annual General Meeting) on the Companys website
https://www.hul.co.in/investor-relations/ and on the website of the Ministry
of Corporate Affairs at www.iepf.gov.in/.

Distribution of Shareholding as on 31st March, 2017

Shareholders Shares
Holding
Number % Number %

1 5000 3,20,344 96.41 13,66,25,836 6.31

5001 10000 6,837 2.06 4,80,26,756 2.22

10001 20000 3,101 0.93 4,28,26,696 1.98

20001 30000 776 0.24 1,87,84,910 0.87

30001 40000 310 0.09 1,07,11,025 0.50

40001 50000 167 0.05 74,47,875 0.34

50001 100000 310 0.09 2,16,56,279 1.00

100001 and above 430 0.13 187,82,70,262 86.78

TOTAL 3,32,275 100.00 216,43,49,639 100.00

Categories of shareholders as on 31st March, 2017

No. of
Category Shares % 12. 21%
Folios
Unilever and its Associates 7 1,45,44,12,858 67.20 0. 01%
Mutual Funds & Unit Trust 0. 38%
251 3,84,35,314 1.78
of India
1. 28%
Financial Institutions / Banks 143 71,19,045 0.33
Insurance Companies 18 7,68,60,446 3.55 13. 26%

Foreign Institutional
752 28,70,42,963 13.26
Investors
Bodies Corporate 2,247 2,77,34,361 1.28
NRIs / Foreign Bodies
3. 55 %
Corporate / Foreign 6,095 83,99,911 0.38
Nationals 0. 33 %

Directors and Their Relatives 7 1,20,783 0.01 1. 78 % 67 .20%

Resident Individuals &

3,22,755 26,42,23,958 12.21
Others
Total 3,32,275 2,16,43,49,639 100.00

Annual Report 2016-17 Hindustan Unilever Limited

60 Corporate Governance

Bifurcation of shares held in physical and demat form as on 31st March, 2017
Particulars No. of Shares %
Physical Segment 4,75,59,208 2.20
Demat Segment
NSDL (A) 2,08,69,60,640 96.42
CDSL (B) 2,98,29,791 1.38
Total (A+B) 2,11,67,90,431 97.80
TOTAL 2,16,43,49,639 100.00
* includes shares held by Unilever PLC and its Affiliates representing 67.20% of the total shareholding There are no outstanding GDRs / ADRs / Warrants / Convertible
Instruments of the Company

Listing Details
Name and Address of Stock Exchange Stock Code
BSE Limited (BSE) 500696
Floor 25, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001.

National Stock Exchange of India Limited (NSE) HINDUNILVR

Exchange Plaza, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051

ISIN INE030A01027
The listing fee for the financial year 2016-17 has been paid to the above Stock Exchanges.

Share Price Data

The monthly high and low prices and volumes of shares of the Company at BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE)
for the year ended 31st March, 2017 are as under:

BSE NSE
Month
High Low Volume High Low Volume
Apr-16 907.00 844.95 12,47,947 906.90 845.10 2,13,40,028
May-16 869.45 806.75 21,27,436 869.70 806.15 4,07,75,944
Jun-16 907.30 835.10 21,08,689 908.00 835.00 2,80,74,289
Jul-16 949.00 886.00 29,52,075 951.45 886.10 2,48,37,369
Aug-16 945.85 899.75 33,35,719 947.00 900.00 2,23,34,367
Sep-16 954.00 865.00 18,27,787 954.00 865.00 2,61,86,308
Oct-16 888.55 820.05 13,94,964 889.70 818.40 2,83,78,884
Nov-16 866.85 783.25 17,36,352 866.40 783.25 3,02,11,072
Dec-16 854.00 782.95 10,70,549 855.70 781.95 1,62,14,478
Jan-17 875.65 817.25 23,49,507 875.95 816.55 2,06,56,698
Feb-17 871.80 839.00 36,33,291 872.00 837.50 2,15,50,956
Mar-17 925.00 862.80 34,53,761 923.80 862.20 2,67,99,345

BSE SENSEX Vs HUL SHARE PRICE (INDEXED) NSE NIFTY Vs HUL SHARE PRICE (INDEXED)

120 120
115 115
110 110
105 105
100 100
95 95
90 90
85 85
80 80
May-16

Mar-17
Aug-16

Nov-16

May-16
Dec-16

Mar-17
Sep-16

Aug-16

Nov-16
Jun-16

Feb-17

Dec-16
Jan-17

Sep-16
Apr-16

Jun-16

Feb-17
Jan-17
Oct-16

Oct-16
Jul-16

Jul-16

HUL BSE SENSEX INDEXED HUL NSE NIFTY

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 61

10 - year Performance of Hindustan Unilever Share vis--vis Sensex and Nifty

Date of HUL Share Price HUL Share BSE Sensex HUL Share HUL Share NSE Nifty
Purchase on BSE Performance Sensex Performance Price on NSE Performance Nifty Performance

01-01-2008 218.10 278% 20,300.00 31% 218.45 278% 6,144.35 33%

01-01-2009 250.75 229% 9,903.46 169% 250.75 229% 3,033.45 170%

01-04-2010 264.70 212% 17,558.73 51% 264.70 212% 5,232.20 56%

01-03-2011 313.15 163% 20,561.05 29% 313.15 164% 6,157.60 33%

01-03-2012 407.95 102% 15,939.36 67% 407.70 102% 4,765.30 72%

01-01-2013 530.60 55% 19,580.81 36% 530.60 56% 5,950.85 37%

01-01-2014 570.00 45% 21,222.19 25% 570.65 45% 6,301.65 30%

01-01-2015 758.25 9% 27,507.54 -3% 758.45 9% 8,284.00 -1%

01-01-2016 856.55 -4% 26,160.90 2% 856.55 -4% 7,963.20 3%

02-01-2017 824.55 - 26,595.45 - 825.35 - 8,179.50 -

Source : BSE and NSE Website

All comparisons are with respect to 2nd January, 2017 (the reference date).

Mergers and Demergers Investor Services

The details of Mergers and Demergers with Companies and respective
share exchange ratios are available on Investor Centre page on the
website of the Company www.hul.co.in.
Plant Locations
The details of Plant Locations form part of this Report.
COMMUNICATION TO SHAREHOLDERS
Effective communication of information is an essential component of
Corporate Governance. It is a process of sharing information, ideas,
thoughts, opinions and plans to all stakeholders which promotes
management-shareholder relations. The Company regularly interacts
with shareholders through multiple channels of communication such
as results announcement, annual report, media releases, Companys
website and subject specific communications.
The quarterly, half yearly and annual results of the Companys performance
are published in leading newspapers such as Times of India and
Maharashtra Times. These results are also made available on the website
of the Company www.hul.co.in/investorrelations/QuarterlyResults. The
website also displays vital information relating to the Company and its
performance, official press releases and presentation to analysts. The
Company also sends quarterly, half yearly and annual results as well as
the notice of the Board Meeting to Members through e-mail.
The Investor Relation page of the Companys website provides more than
50 Frequently Asked Questions on various topics related to transfers and
transmission of shares, dematerialisation, nomination, change of address,
loss of share certificates, dividend and sub-division of share certificates.
In addition, various downloadable forms required to be executed by the
shareholders have also been provided on the website of the Company.
The Quarterly Results, Shareholding Pattern and all other corporate
communication to the Stock Exchanges are filed through NSE Electronic
Application Processing System (NEAPS) and BSE Listing Centre, for
dissemination on their respective websites.
Web-based Query Redressal System
Members may utilise the facility extended by the Registrar and Transfer
Agent for redressal of queries, by visiting https://karisma.karvy.com/ and
clicking on INVESTORS option for query registration through free identity
registration process.
Investors can submit their query in the QUERIES option provided on the
above website, which would generate the grievance a registration number.
For accessing the status / response to the query submitted, the grievance
registration number can be used at the option VIEW REPLY after
24 hours. Investors can continue to put an additional query, if any, relating
to the grievence till they get a satisfactory reply.
Investors can provide their feedback on the services provided by the
Company and its Registrar and Transfer Agent by filling the Shareholder
Satisfaction Survey form available in Investor Relation page on website of
the Company at https://www.hul.co.in/investor-relations/.
Alternative Dispute Redressal
Long pending litigations involve significant investment as monetary value
of the disputed shares and accrued dividends / other benefits are locked up
unutilised till the dispute is settled. Further, in terms of the requirements
of the Companies Act, 2013, such dividends / other specified incomes
remaining unclaimed / unpaid for a period of seven years are to be credited
to the Investor Education and Protection Fund Authority (IEPF Authority)
and the shares pertaining to such dividends / other specified incomes shall
be transferred to IEPF Authority. In accordance with the newly notified
IEPF Rules, the Shareholders are entitled to claim the dividends / other
specified incomes / shares from the IEPF Authority.
Keeping the above in mind, the Company in 2004, pioneered the
mechanism of providing an alternate dispute redressal for Shareholders
to resolve the shares related disputes pending before the courts /
authorities by amicable settlement.

Annual Report 2016-17 Hindustan Unilever Limited

62 Corporate Governance

The Company had started this unique initiative of organising Alternative Dispute
Redressal meetings wherein aggrieved investors come face to face and get a
chance to settle their disputes, some of which were pending for years.
A number of Shareholders have availed the benefit of this process and the
Company through its various initiatives keeps exploring the possibilities
of settling such issues. The process helps the investors in releasing the
locked up investment and save their time consumed in contesting legal
proceedings. The objective of this process is to facilitate quick resolution
of the dispute between the parties.
The Shareholders who are willing to avail the benefits of
Alternative Dispute Redressal mechanism may approach the Investor Service
Department of the Company at the Registered Office of the Company.

Address for Correspondence

All shareholders correspondence should be forwarded to Karvy Computershare Private Limited, the Registrar and Transfer Agent of the Company or to
the Investor Service Department at the Registered Office of the Company at the addresses mentioned below.
The Companys dedicated e-mail address for Investors Complaints and other communications is levercare.shareholder@unilever.com.

Karvy Computershare Private Limited Investor Service Department Compliance Officer

Unit: Hindustan Unilever Limited
Karvy Selenium Tower B,
Plot 31-32, Gachibowli
Financial District, Nanakramguda
Hyderabad - 500 032
Phone: +91 - 40 671 61500, 332 11000
Fax: +91 - 40 234 20814, 230 01153
Toll Free no.: 1800-345-4001
E-mail: einward.ris@karvy.com
Website: www.karvy.com
Hindustan Unilever Limited
Unilever House, B. D. Sawant Marg, Chakala,
Andheri (East), Mumbai - 400 099
Phone: +91 - 22 39832285 / 32452
Fax: +91 - 22 - 28249457
E-mail: levercare.shareholder@unilever.com
Website: www.hul.co.in
Mr. Dev Bajpai
Executive Director (Legal & Corporate Affairs) and
Company Secretary
E-mail: levercare.shareholder@unilever.com
Phone: +91 - 22 - 39832557 / 34485 / 32532 /32312

Annexure to the Corporate Governance Report

Dividend Distribution Policy
The Companys Dividend Distribution Policy shall ensure that it returns strive to declare a steady stream of dividends to the shareholders that is
cash from operations that is in excess of its immediate and foreseeable in their best long term interest.
needs back to the shareholders over the long term. Interim dividend is
The declaration and distribution of dividends, whether interim or final,
considered for declaration by the Board based on the performance of the
will, at all times, be in accordance with the Companies Act, 2013 and the
Company during the year and final dividend is based on the performance
SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015,
for the full year. The actual quantum of dividend pay-out on a yearly
such other applicable provisions of law and the Articles of Association of
basis will be dependent on the existing and expected underlying financial
the Company as amended.
performance, market conditions, cash flow position, interim dividend, if
any, already declared during the year and future requirements of funds. This Policy is issued with the consent of the Board of Directors of the
As such any amount retained will be utilized for securing the long term Company and can be amended only with the authority of the Board of
growth objectives of the business. With this in mind, the Company shall Directors.

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 63

CHIEF EXECUTIVE OFFICER (CEO) & CHIEF FINANCIAL

OFFICER (CFO) CERTIFICATION
To
The Board of Directors
Hindustan Unilever Limited
We, the undersigned, in our respective capacities as Chief Executive Officer and Chief Financial Officer of Hindustan Unilever Limited (the Company), to
the best of our knowledge and belief certify that:
(a) We have reviewed the financial statements and the cash flow statement for the financial year ended 31st March, 2017 and to the best of our
knowledge and belief, we state that:
(i) these statements do not contain any materially untrue statement or omit any material fact or contain any statements that might be misleading;
(ii) these statements together present a true and fair view of the Companys affairs and are in compliance with the existing accounting standards,
applicable laws and regulations.
(b) We further state that to the best of our knowledge and belief, there are no transactions entered into by the Company during the year, which are
fraudulent, illegal or violative of the Companys code of conduct.
(c) We hereby declare that all the members of the Board of Directors and Management Committee have confirmed compliance with the Code of Conduct
as adopted by the Company.
(d) We are responsible for establishing and maintaining internal controls and for evaluating the effectiveness of the same over the financial reporting of
the Company and have disclosed to the Auditors and the Audit Committee, deficiencies in the design or operation of internal controls, if any, of which
we are aware and the steps we have taken or propose to take to rectify these deficiencies.
(e) We have indicated, based on our most recent evaluation, wherever applicable, to the Auditors and Audit Committee:
(i) significant changes, if any, in the internal control over financial reporting during the year;
(ii) significant changes, if any, in the accounting policies made during the year and that the same has been disclosed in the notes to the financial
statements; and
(iii) instances of significant fraud of which we have become aware and the involvement therein, if any, of the management or an employee having
significant role in the Companys internal control system over financial reporting.

Sanjiv Mehta P. B. Balaji

Mumbai, 17th May, 2017 Managing Director and Executive Director - Finance & IT
Chief Executive Officer and Chief Financial Officer
DIN: 06699923 DIN: 02762983

Hindustan Unilever Ltd Annual Report 2016-17

64 Corporate Governance

Certificate of compliance with the corporate

governance
Independent Auditors Certificate on Compliance with the Corporate Governance
requirements under SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015

To the Members of
Hindustan Unilever Limited
1. This certificate is issued in accordance with the terms of our engagement letter dated 15th July, 2016.
2. This report contains details of compliance of conditions of corporate governance by Hindustan Unilever Limited (the Company) for the year
ended 31st March, 2017 as stipulated in Regulations 17-27, clause (b) to (i) of Regulation 46 (2) and paragraphs C, D and E of Schedule V of the
Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) pursuant to the
Listing Agreement of the Company with Stock exchanges.
Managements Responsibility for compliance with the conditions of Listing Regulations
3. The compliance with the terms and conditions contained in the corporate governance is the responsibility of the Management of the Company
including the preparation and maintenance of all relevant supporting records and documents.
Auditors Responsibility
4. Our examination was limited to procedures and implementation thereof adopted by the Company for ensuring the compliance of the conditions of
Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.
5. Pursuant to the requirements of the Listing Regulations, it is our responsibility to provide a reasonable assurance whether the Company has
complied with the conditions of Corporate Governance as stipulated in Listing Regulations for the year ended 31st March, 2017.
6. We conducted our examination in accordance with the Guidance Note on Reports or Certificates for Special Purposes issued by the Institute of
Chartered Accountants of India (ICAI). The Guidance Note requires that we comply with the ethical requirements of the Code of Ethics issued by the
ICAI.
7. We have complied with the relevant applicable requirements of the Standard on Quality Control (SQC) 1, Quality Control for Firms that Perform Audits
and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements.
Opinion
8. In our opinion, and to the best of our information and according to explanations given to us, we certify that the Company has complied with the
conditions of Corporate Governance as stipulated in the above-mentioned Listing Regulations.
9. We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the
management has conducted the affairs of the Company.
Restriction on use
10. The certificate is addressed and provided to the members of the Company solely for the purpose to enable the Company to comply with the
requirement of the Listing Regulations, and it should not be used by any other person or for any other purpose. Accordingly, we do not accept or
assume any liability or any duty of care for any other purpose or to any other person to whom this certificate is shown or into whose hands it may
come without our prior consent in writing.

For BSR & Co. LLP

Chartered Accountants
Firms Registration No: 101248W/W-100022

Akeel Master
Partner
Mumbai, 17th May, 2017 Membership No: 046768

Hindustan Unilever Limited Annual Report 2016-17


Form No. MR-3 SECRETARIAL AUDIT REPORT
For the financial year ended 31st March, 2017
[Pursuant to section 204(1) of the Companies Act, 2013 and Rule No.9 of the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014]
To,
The Members,
Hindustan Unilever Limited
CIN: L15140MH1933PLC002030
Unilever House, B D Sawant Marg,
Chakala, Andheri East, Mumbai - 400099.
We have conducted the Secretarial Audit of the compliance of applicable
statutory provisions and the adherence to good corporate practices
by Hindustan Unilever Limited (hereinafter called the Company).
Secretarial Audit was conducted in a manner that provided us a reasonable
basis for evaluating the corporate conducts / statutory compliances and
expressing our opinion thereon.
Based on our verification of the Companys books, papers, minute books,
forms and returns filed and other records maintained by the Company
and also the information provided by the Company, its officers, agents
and authorized representatives during the conduct of secretarial audit,
we hereby report that in our opinion, the Company has, during the audit
period covering the financial year ended 31st March, 2017, complied with
the statutory provisions listed hereunder and also that the Company has
proper Board-processes and compliance-mechanism in place to the
extent, in the manner and subject to the reporting made hereinafter:
We have examined the books, papers, minute books, forms and returns
filed and other records maintained by the Company for the financial year
ended on 31st March 2017, according to the provisions of:
i. The Companies Act, 2013 (the Act) and the rules made thereunder
and the applicable provisions of the Companies Act, 1956;
ii. The Securities Contracts (Regulation) Act, 1956 (SCRA) and the rules
made thereunder;
iii. The Depositories Act, 1996 and the Regulations and Bye-laws framed
thereunder;
iv. Foreign Exchange Management Act, 1999 and the rules and regulations
made thereunder to the extent of Foreign Direct Investment, Overseas
Direct Investment and External Commercial Borrowings;
v. The following Regulations and Guidelines prescribed under the
Securities and Exchange Board of India Act, 1992 (SEBI Act): -
a. The Securities and Exchange Board of India (Substantial
Acquisition of Shares and Takeovers) Regulations, 2011;
b. The Securities and Exchange Board of India (Prohibition of Insider
Trading) Regulations, 2015;
c. The Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009; [Not Applicable
as the Company has not issued any further capital under the
regulations during the period under review]
d. The Securities and Exchange Board of India (Share Based
Employee Benefits) Regulations, 2014;
e. The Securities and Exchange Board of India (Issue and Listing
of Debt Securities) Regulations, 2008 [Not Applicable as the
Company has not issued and listed any debt securities during
the financial year under review];
f. The Securities and Exchange Board of India (Registrars to an
Issue and Share Transfer Agents) Regulations, 1993 regarding
the Companies Act and dealing with client [Not Applicable as
the Company is not registered as Registrar to Issue and Share
Transfer Agent during the financial year under review];
Overview Reports Financial Statements 65
g. The Securities and Exchange Board of India (Delisting of Equity
Shares) Regulations, 2009 [Not applicable as the Company has
not delisted / proposed to delist its equity shares from any
Stock Exchange during the financial year under review];
h. The Securities and Exchange Board of India (Buyback of
Securities) Regulations, 1998 [Not applicable as the Company
has not bought back / proposed to buy-back any of its securities
during the financial year under review].
vi. The Management has identified and confirmed the following laws as
specifically applicable to the Company:
i. The Hazardous Wastes (Management and Handling) Rules, 1989;
ii. The Insecticide Act, 1968;
iii. The Drugs and Cosmetics Act, 1940;
iv. The Prevention of Food Adulteration Act, 1954;
v. The Legal Metrology Act, 2009;
vi. The Legal Metrology (Packaged Commodities) Rules 2011;
vii. Food Safety and Standards Act, 2006 and Rules 2011 with allied
rules and regulations.
We have also examined compliance with the applicable clauses of the following:
(i) Secretarial Standards with regard to Meeting of Board of Directors
(SS-1) and General Meetings (SS-2) issued by The Institute of
Company Secretaries of India;
(ii) The Listing Agreements entered into by the Company with BSE
Limited and National Stock Exchange of India Limited and SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015.
During the period under review the Company has complied with the
provisions of the Act, Rules, Regulations, Guidelines, Standards, etc.
mentioned above.
We further report that: -
The Board of Directors of the Company is duly constituted with proper
balance of Executive Directors, Non-Executive Directors, Independent
Directors and Woman Director.
Adequate notice is given to all Directors to schedule the Board /
Committee Meetings, agenda and detailed notes on agenda were sent
generally seven days in advance.
A system exists for seeking and obtaining further information
and clarifications on the agenda items before the meeting and for
meaningful participation at the meeting.
All decisions of the Board and Committees were carried with requisite
majority.
We further report that based on review of compliance mechanism
established by the Company and on the basis of the Compliance
Certificate(s) issued by the Company Secretary and taken on record by
the Board of Directors at their meeting(s), we are of the opinion that there
are adequate systems and processes in place in the Company which is
commensurate with the size and operations of the Company to monitor
and ensure compliance with applicable laws, rules, regulations and
guidelines: -
As informed, the Company has responded appropriately to notices
received from various statutory / regulatory authorities including
initiating actions for corrective measures, wherever found necessary.
Annual Report 2016-17 Hindustan Unilever Limited
66 Corporate Governance

We further report that during the audit period there were following specific events / actions having a major bearing on Companys affairs in pursuance
of the above-referred laws, rules, regulations, guidelines, standards, etc.: -
The members at a Court Convened Meeting held on 30th June, 2016 has considered and approved Scheme of arrangement under Section 391-394 of
the Companies Act, 1956 between the Company and its members to re-classify and transfer the amounts lying to the credit of the General Reserve
to the Profit and Loss account of the Company.

For S. N. ANANTHASUBRAMANIAN & CO.

Company Secretaries

S. N. ANANTHASUBRAMANIAN
PARTNER
C.P No: 1774
Thane, 15th May 2017

Note: This report is to be read with letter of even date by the Secretarial Auditors, which is annexed and Forms an integral part of this report.

Annexure to Secretarial Auditors Report

To,
The Members,
Hindustan Unilever Limited
CIN: L15140MH1933PLC002030
Unilever House, B D Sawant Marg,
Chakala, Andheri East,
Mumbai- 400099.
Our Secretarial Audit Report for the financial year 31st March, 2017 is to be read along with this letter.

Managements Responsibility
1. It is the responsibility of the management of the Company to maintain secretarial records, devise proper systems to ensure compliance with the
provisions of all applicable laws and regulations and to ensure that the systems are adequate and operate effectively.

Auditors Responsibility
2. Our responsibility is to express an opinion on these secretarial records, standards and procedures followed by the Company with respect to secretarial
compliances.
3. We believe that audit evidence and information obtained from the Companys management is adequate and appropriate for us to provide a basis for
our opinion.
4. Wherever required, we have obtained the managements representation about the compliance of laws, rules and regulations and happening of events etc.

Disclaimer
5. The Secretarial Audit Report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the
management has conducted the affairs of the Company.
6. We have not verified the correctness and appropriateness of financial records and books of account of the Company.

For S. N. ANANTHASUBRAMANIAN & CO.

Company Secretaries

S. N. ANANTHASUBRAMANIAN
PARTNER
C.P No: 1774
Thane, 15th May 2017

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 67

ECONOMIC VALUE ADDED

What does EVA show?

ADDITIONAL INFORMATION : ECONOMIC VALUE
ADDED (EVA) EVA is residual income after charging the Company for the cost of capital
provided by lenders and shareholders. It represents the value added to
What is EVA? the shareholders by generating operating profits in excess of the cost of
Traditional approaches to measuring Shareholders Value Creation have capital employed in the business.
used parameters such as earnings capitalisation, market capitalisation When will EVA increase?
and present value of estimated future cash flows. Extensive equity
research has established that it is not earnings per se, but VALUE that is EVA will increase if:
important. A measure called Economic Value Added (EVA) is increasingly a. Operating profits can be made to grow without employing more
being applied to understand and evaluate financial performance. capital, i.e. greater efficiency.
*EVA = Net Operating Profit after Taxes (NOPAT) - Cost of Capital b. Additional capitals invested in projects that return more than the cost
Employed (COCE), where, of obtaining new capital, I.e. profitable growth.
NOPAT = Profits after depreciation and taxes but before interest costs. c. Capital is curtailed in activities that do not cover the cost of capital, i.e
NOPAT thus represents the total pool of profits available on an ungeared liquidate unproductive capital.
basis to provide a return to lenders and shareholders, and
EVA in practice at Hindustan Unilever Limited.
COCE = Weighted Average Cost of Capital (WACC) x Average Capital
Employed In Hindustan Unilever Limited, the goal of sustainable long term value
creation for our shareholders is well understood by all the business
*Cost of debt is taken at the effective rate of interest applicable to an groups. Measures to evaluate business performance and to set targets
AAA rated Company like HUL for a short term debt, net of taxes. We have take into account this concept of value creation.
considered a pre tax rate of 7.42% for 2016-17 (8.22% for 2015-16)
*Cost of Equity is the return expected by the investors to compensate them
for the variability in returns caused by fluctuating earnings and share
prices.
Cost of Equity = Risk free return equivalent to yield on long term
Government Bonds (taken at 6.68% for 2016-17)
+
Market risk premium (taken at 8.69%) (x) Beta variant for the Company,
(taken at 0.710) where Beta is a relative measure of risk associated with
the Companys shares as against the market as a whole.
Thus HULs cost of equity = 6.68% + 8.69% (x) 0.710 = 12.85%

Annual Report 2016-17 Hindustan Unilever Limited

68 Standalone

ECONOMIC VALUE ADDED (CONTD.)

EVA Trends:2007-2017 (Unaudited) (` crores)

I-GAAP IND AS
Particulars
2007 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2015-16# 2016-17
Cost of Capital Employed (COCE)
1. Average Debt 382 342 119 2 0 0 0 0 0 0 0
2. Average Equity 2,402 1,928 2,497 3,118 3,462 4,018 3,715 4,338 4,603 5,664 5,831
3. Average Capital Employed : (1) + (2) 2,784 2,270 2,616 3,120 3,462 4,018 3,715 4,338 4,603 5,664 5,831
4. Cost of Debt, post-tax % 6.24 3.91 3.95 5.36 6.20 6.02 6.36 5.56 5.43 5.43 4.90
5. Cost of Equity % 17.59 14.47 12.51 12.93 10.10 10.07 11.62 10.91 11.99 11.98 12.85
6. Weighted Average Cost of Capital % (WACC) 16.03 12.88 12.12 12.92 10.10 10.07 11.62 10.91 11.99 11.98 12.85
7. COCE : (3) x (6) 446 365 317 403 350 405 432 474 552 679 749
Economic Value Added (EVA)
8. Profit after tax, before exceptional items 1,743 2,501 2,103 2,153 2,599 3,314 3,555 3,843 4,078 4,116 4,247
9. Add : Interest, after taxes 17 17 5 0 1 17 24 11 0 0 0
10. Net Operating Profits After Taxes (NOPAT) 1,760 2,518 2,108 2,153 2,600 3,331 3,579 3,854 4,078 4,117 4,247
11. COCE, as per (7) above 446 365 317 403 350 405 432 474 552 679 749
12. EVA : (10) - (11) 1,314 2,154 1,791 1,750 2,250 2,926 3,147 3,380 3,526 3,438 3,498

ECONOMIC VALUE ADDED (EVA) (` crores)

3800

3400

3000

2600

2200

1800

1400

1000

600

200

-200
2015-16#
2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17
2007

#
Figures are restated as per IND AS
Hindustan Unilever Limited Annual Report 2016-17

INDEPENDENT AUDITORS REPORT
to the Members of Hindustan Unilever Limited
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements
of Hindustan Unilever Limited (the Company), which comprise the
Balance Sheet as at 31 March 2017, the Statement of Profit and Loss
(including other comprehensive income), the Statement of Cash Flows and
the Statement of Changes in Equity for the year ended on that date and
a summary of the significant accounting policies and other explanatory
information (herein after referred to as standalone Ind AS financial
statements).
Managements Responsibility for the Standalone Ind AS
Financial Statements
The Companys Board of Directors is responsible for the matters stated in
sub-section 5 of Section 134 of the Companies Act, 2013 (the Act) with
respect to the preparation of these standalone Ind AS financial statements
that give a true and fair view of the financial position, financial performance
including other comprehensive income, cash flows and changes in equity
of the Company in accordance with the accounting principles generally
accepted in India, including the Indian Accounting Standards (Ind AS)
prescribed under Section 133 of the Act, read with relevant rules issued
thereunder.
This responsibility also includes maintenance of adequate accounting
records in accordance with the provisions of the Act for safeguarding the
assets of the Company and for preventing and detecting frauds and other
irregularities; selection and application of appropriate accounting policies;
making judgments and estimates that are reasonable and prudent; and
design, implementation and maintenance of adequate internal financial
controls, that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the standalone Ind AS financial statements that give a true
and fair view and are free from material misstatement, whether due to
fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these standalone Ind AS
financial statements based on our audit.
We have taken into account the provisions of the Act, the accounting and
auditing standards and matters which are required to be included in the
audit report under the provisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing
specified under sub-section 10 of Section 143 of the Act. Those Standards
require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance about whether the standalone
Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the
amounts and the disclosures in the standalone Ind AS financial statements.
The procedures selected depend on the auditors judgment, including the
assessment of the risks of material misstatement of the standalone Ind AS
financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial controls relevant to
the Companys preparation of the standalone Ind AS financial statements
that give a true and fair view in order to design audit procedures that are
appropriate in the circumstances. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Companys Directors, as well
as evaluating the overall presentation of the standalone Ind AS financial
statements.
Overview Reports Financial Statements 69
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the standalone
Ind AS financial statements.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid standalone Ind AS financial
statements give the information required by the Act in the manner so
required and give a true and fair view in conformity with the accounting
principles generally accepted in India including the Ind AS, of the financial
position of the Company as at 31March 2017, and its financial performance
including other comprehensive income, its cash flows and the changes in
equity for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order, 2016 (the
Order), issued by the Central Government of India in exercise of
powers conferred by sub-section 11 of section 143 of the Act, we
enclose in Annexure A, a statement on the matters specified in
paragraphs 3 and 4 of the Order.
2. As required by sub-section 3 of Section 143 of the Act, we report that:
(a) We have sought and obtained all the information and explanations
which to the best of our knowledge and belief were necessary for
the purposes of our audit;
(b) In our opinion, proper books of account as required by law
have been kept by the Company so far as it appears from our
examination of those books;
(c) The Balance Sheet, the Statement of Profit and Loss (including
other comprehensive income), the Statement of Cash Flows and
the Statement of Changes in Equity dealt with by this Report are
in agreement with the books of account;
(d) In our opinion, the aforesaid standalone Ind AS financial
statements comply with the Indian Accounting Standards
prescribed under Section 133 of the Act, read with relevant rules
issued thereunder;
(e) On the basis of the written representations received from the
Directors as on 31March2017 and taken on record by the Board
of Directors, none of the Directors are disqualified as on 31
March 2017 from being appointed as a Director in terms of sub-
section 2 of Section 164 of the Act;
(f) With respect to the adequacy of the internal financial controls
over financial reporting of the Company and the operating
effectiveness of such controls, refer to our separate report in
Annexure B and
(g) With respect to the other matters to be included in the Auditors
Report in accordance with Rule 11 of the Companies (Audit
and Auditors) Rules, 2014, in our opinion and to the best of our
information and according to the explanations given to us:
1. The Company has disclosed the impact of pending
litigations on its financial position in its standalone Ind AS
financial statements Refer Note 25 to the standalone Ind
AS financial statements;
2. The Company has made provision, as required under
the applicable law or accounting standards, for material
Annual Report 2016-17 Hindustan Unilever Limited
70 Standalone

INDEPENDENT AUDITORS REPORT (Contd.)

foreseeable losses, if any, on long-term contracts including us by the Management Refer Note 45 to the standalone
derivative contracts Refer Note 47 to the standalone Ind Ind AS financial statements.
AS financial statements;
3. There has been no delay in transferring amounts, required For B S R & Co. LLP
to be transferred, to the Investor Education and Protection Chartered Accountants
Fund by the Company; and Firms Registration No:
4. The Company has provided requisite disclosures in the 101248W/ W - 100022
standalone Ind AS financial statements as to holdings as
well as dealings in Specified Bank Notes during the period
Akeel Master
from 8 November 2016 to 30 December 2016. Based on audit
Partner
procedures and relying on the management representation,
Membership No: 046768
we report that the disclosures are in accordance with books
of account maintained by the Company and as produced to Mumbai: 17 May 2017

Hindustan Unilever Limited Annual Report 2016-17


ANNEXURE A TO THE INDEPENDENT
AUDITORS REPORT - 31MARCH 2017
(Referred to in our report of even date)
(i) (a) 
The Company has maintained proper records showing full
particulars, including quantitative details and situation, of fixed
assets.
(b) The Company has a regular programme of physical verification of
its fixed assets by which all fixed assets are verified in a phased
manner over a period of two years. In accordance with this
programme, a portion of the fixed assets has been physically
verified by the management during the year and no material
discrepancies have been noticed on such verification. In our
opinion, this periodicity of physical verification is reasonable having
regard to the size of the Company and the nature of its assets.
(c) According to the information and explanations given to us, the
title deeds of immovable properties, as disclosed in Note 4A to
the standalone Ind AS financial statements, are held in the name
of the Company, except for the following:
 (Rs. in Crores)
Particulars Leasehold Land Freehold Land Buildings
Gross block as at 0.76 0.19 75.36
31 March 2017
Net block as at 0.62 0.19 42.86
31 March 2017
(ii) The inventory, except goods-in-transit, has been physically verified
by the management at reasonable intervals during the year. In our
opinion, the frequency of such verification is reasonable. In respect
of inventory lying with third parties, these have substantially been
confirmed by them. The discrepancies noticed on verification between
the physical stocks and the book records were not material.
(iii) In our opinion and according to information and explanations given to
us, the Company has not granted any loans, secured or unsecured, to
companies, firms, Limited Liability Partnerships or other parties covered
in the register maintained under section 189 of the Act. Accordingly,
paragraph 3(iii) of the Order is not applicable to the Company.
(iv) The Company has not granted any loans or provided any guarantees
or security to the parties covered under Section 185 of the Act. The
Company has complied with the provisions of Section 186 of the Act
in respect of investments made or loans or guarantee or security
provided to the parties covered under Section 186.
(v) The Company has not accepted any deposits from the public in
accordance with the provisions of sections 73 to 76 of the Act and the
rules framed there under.
(vi) We have broadly reviewed the records maintained by the Company
pursuant to the rules prescribed by Central Government for
maintenance of cost records under sub section 1 of Section 148 of the
Act and are of the opinion that prima facie, the prescribed accounts
and records have been made and maintained. However, we have not
made a detailed examination of the records.
(vii) (a) According to the information and explanations given to us and
the records of the Company examined by us, in our opinion, the
Company is regular in depositing the undisputed statutory dues
including provident fund, employees state insurance, income
tax, sales tax, service tax, duty of customs, duty of excise, value
added tax, cess, professional tax and other material statutory
dues, as applicable, with the appropriate authorities.
According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund,
employees state insurance, income tax, sales tax, service
Overview Reports Financial Statements 71
tax, duty of customs, duty of excise, value added tax, cess,
professional tax and other material statutory dues were in
arrears as at 31March2017 for a period of more than six months
from the date they became payable.
(b) According to the information and explanations given to us, there
are no dues of income tax, sales tax, value added tax, service tax,
duty of customs, duty of excise which have not been deposited
with the appropriate authorities on account of any dispute other
than those mentioned in Appendix I to this report.
(viii) As the Company does not have any loans or borrowings from any
financial institution or bank or Government, nor has it issued any
debentures, as at the balance sheet date the provisions of Clause
3(viii) of the Order are not applicable to the Company.
(ix) The Company has not raised any money by way of initial public offer,
further public offer (including debt instruments) and term loans
during the year. Accordingly, the provisions of Clause 3(ix) of the Order
are not applicable to the Company.
(x) According to the information and explanations given to us, no material
fraud by the Company or on the Company by its officers or employees
has been noticed or reported during the course of our audit.
(xi) According to the information and explanations given to us and based
on our examination of the records, the Company has paid/provided for
managerial remuneration in accordance with the requisite approvals
mandated by the provisions of section 197 read with Schedule V to the Act.
(xii) In our opinion and according to the information and explanations given
to us, the Company is not a nidhi company. Accordingly, paragraph
3(xii) of the Order is not applicable.
(xiii) According to the information and explanations given to us and based
on our examinations of the records of the Company, transactions with
the related parties are in compliance with sections 177 and 188 of the
Act, where applicable. The details of such related party transactions
have been disclosed in the standalone Ind AS financial statements as
required by applicable accounting standards.
(xiv) According to the information and explanations given to us and based
on our examination of the records, the Company has not made any
preferential allotment or private placement of shares or fully or partly
convertible debentures during the year.
(xv) According to the information and explanations given to us and based
on our examination of the records, the Company has not entered into
non-cash transactions with directors or persons connected with him.
Accordingly, paragraph 3(xv) of the Order is not applicable.
(xvi) The Company is not required to be registered under Section 45-IA
of the Reserve Bank of India Act, 1934. Accordingly, the provisions of
Clause 3(xvi) of the Order are not applicable to the Company.
For B S R & Co. LLP
Chartered Accountants
Firms Registration No:
101248W/ W - 100022
Akeel Master
Partner
Membership No: 046768
Mumbai : 17 May 2017
Annual Report 2016-17 Hindustan Unilever Limited
72 Standalone

ANNEXURE A TO THE INDEPENDENT

AUDITORS REPORT - 31MARCH 2017 (Contd.)

Appendix I
 (Rs. in Crores)

Name of the Nature of dues Amount Amount Paid Period to which Forum where dispute is
Statute Demanded under dispute the amount pending
Rs. in crores Rs. in crores relates

The Central Excise Excise duty (including interest and penalty, if 71.67 3.67 1987-2016 Appellate Authority upto
Act, 1994 applicable) Commissioners level

The Central Excise Excise duty (including interest and penalty, if 71.51 3.69 1994-2016 Customs, Excise and
Act applicable) Service Tax Appellate
Tribunals of various states

The Central Excise Excise duty (including interest and penalty, if 3.59 - 2003-2010 High Courts of various
Act applicable) states

Customs Act, 1962 Custom Duty (including interest and penalty, 1.62 0.12 2011-2013 Appellate Authority upto
if applicable) Commissioners level

Customs Act, 1962 Custom Duty (including interest and penalty, 0.05 0.05 2012 Customs, Excise and
if applicable) Service Tax Appellate
Tribunals of various states

Central Sales Tax Sales tax (including interest and penalty, as 150.17 49.83 1985-2017 Appellate Authority upto
Act and Local Sales applicable) Commissioners level
Tax Act

Central Sales Tax Sales tax (including interest and penalty, as 28.78 2.23 1984-2014 Sales Tax Appellate
Act and Local Sales applicable) Tribunals of various states
Tax Act

Central Sales Tax Sales tax (including interest and penalty, as 142.36 101.29 1984-2017 High Courts of various
Act and Local Sales applicable) states
Tax Act

Central Sales Tax Sales tax (including interest and penalty, as 27.63 12.76 1985-2009 Supreme Court
Act and Local Sales applicable)
Tax Act

Service tax Service tax (including interest and penalty, 79.25 0.56 2005-2017 Appellate Authority upto
(Finance Act, 1994) as applicable) Commissioners level

Service tax Service tax (including interest and penalty, 8.11 1.5 2003-2008 Customs, Excise and
(Finance Act, 1994) as applicable) Service Tax Appellate Tri-
bunals of various states

Income Tax Act, Income Tax (including interest and penalty, 153.21 - 1979 - 1980, Appellate Authority upto
1961 if applicable) 1991, AY 2006- Commissioners Level
07, AY 2007-08,
AY 2009-10, AY
2011-12

Income Tax Act, Income Tax (including interest and penalty, 0.20 - 1982-1983 Income Tax Appellate
1961 if applicable) Tribunal, Mumbai

Income Tax Act, Income Tax (including interest and penalty, 0.06 - 1963-1964 Bombay High Court
1961 if applicable) 1982-1983

Hindustan Unilever Limited Annual Report 2016-17


ANNEXURE B TO THE INDEPENDENT AUDITORS REPORT- 31MARCH 2017
ON STANDALONE IND AS FINANCIAL STATEMENTS
(Referred to in our report of even date)
Report on the Internal Financial Controls under Clause (i)
of Sub-section 3 of Section 143 of the Act
We have audited the internal financial controls over financial reporting
of Hindustan Unilever Limited (the Company) as of 31 March 2017 in
conjunction with our audit of the standalone Ind AS financial statements of
the Company for the year ended on that date.
Managements Responsibility for Internal Financial
Controls
The Companys management is responsible for establishing and
maintaining internal financial controls based on the internal controls
over financial reporting criteria established by the Company considering
the essential components of internal controls stated in the Guidance
Note on Audit of Internal Financial Controls over Financial Reporting (the
Guidance Note) issued by the Institute of Chartered Accountants of India
(ICAI). These responsibilities include the design, implementation and
maintenance of adequate internal financial controls that were operating
effectively for ensuring the orderly and efficient conduct of its business,
including adherence to Companys policies, the safeguarding of its assets,
the prevention and detection of frauds and errors, the accuracy and
completeness of the accounting records, and the timely preparation of
reliable financial information, as required under the Companies Act, 2013
(the Act).
Auditors Responsibility
Our responsibility is to express an opinion on the Companys internal
financial controls over financial reporting based on our audit. We conducted
our audit in accordance with the Guidance Note and the Standards on
Auditing, issued by ICAI and deemed to be prescribed under section
143(10) of the Act to the extent applicable to an audit of internal financial
controls, both applicable to an audit of Internal Financial Controls and,
both issued by the ICAI. Those Standards and the Guidance Note require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether adequate internal financial
controls over financial reporting was established and maintained and if
such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about
the adequacy of the internal financial controls system over financial
reporting and their operating effectiveness. Our audit of internal financial
controls over financial reporting included obtaining an understanding of
internal financial controls over financial reporting, assessing the risk that
a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal controls based on the assessed risk.
The procedures selected depend on the auditors judgment, including the
assessment of the risks of material misstatement of the standalone Ind AS
financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the Companys
internal financial control system over financial reporting.
Overview Reports Financial Statements 73
Meaning of Internal Financial Controls Over Financial
Reporting
A companys internal financial controls over financial reporting is a
process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles. A companys internal financial controls over financial reporting
includes those policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorisations of
management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorised
acquisition, use, or disposition of the companys assets that could have a
material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over
Financial Reporting
Because of the inherent limitations of internal financial controls over
financial reporting, including the possibility of collusion or improper
management override of controls, material misstatements due to error or
fraud may occur and not be detected. Also, projections of any evaluation
of the internal financial controls over financial reporting to future periods
are subject to the risk that the internal financial controls over financial
reporting may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may
deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an adequate
internal financial control system over financial reporting and such internal
financial controls over financial reporting were operating effectively as
at 31 March 2017, based on the internal controls over financial reporting
criteria established by the Company considering the essential components
of internal controls stated in the Guidance Note issued by the ICAI.
For B S R & Co. LLP
Chartered Accountants
Firms Registration No:
101248W/ W - 100022
Akeel Master
Partner
Membership No: 046768
Mumbai: 17 May 2017
Annual Report 2016-17 Hindustan Unilever Limited
74 Standalone

Balance Sheet
As at 31st March, 2017
(All amounts in ` crores, unless otherwise stated)
As at As at As at
Particulars Note
31st March, 2017 31st March, 2016 1st April, 2015
ASSETS

Non-current assets

Property, plant and equipment 4A 3,654 2,902 2,435

Capital work-in-progress 4B 203 386 479

Goodwill 5 0 - -

Other intangible assets 5 370 12 22

Investments in subsidiaries, associates and joint venture 6 254 313 298

Financial assets

Investments 7 6 6 6

Loans 8 198 162 180

Other financial assets 9 114 132 108

Non-current tax assets (net) 10D 311 246 252

Deferred tax assets (net) 10C 160 168 155

Other non-current assets 11 70 41 44

Current assets

Inventories 12 2,362 2,528 2,603

Financial assets

Investments 7 3,519 2,461 2,724

Trade receivables 13 928 1,064 783

Cash and cash equivalents 14 572 635 720

Bank balances other than cash and cash equivalents

15 1,099 2,124 1,818
mentioned above

Other financial assets 9 306 253 323

Other current assets 16 553 465 380

Assets held for sale 17 72 22 9

TOTAL ASSETS 14,751 13,920 13,339

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 75

Balance Sheet (contd.)

As at 31st March, 2017
(All amounts in ` crores, unless otherwise stated)

As at As at As at
Particulars Note
31st March, 2017 31st March, 2016 1st April, 2015
EQUITY AND LIABILITIES

Equity

Equity share capital 18 216 216 216

Other equity 19A 6,274 6,063 5,928

Liabilities

Non-current liabilities

Financial liabilities

Other financial liabilities 20 71 19 18

Provisions 21 485 594 482

Non-current tax liabilities (net) 10D 296 193 135

Other non-current liabilities 22 207 183 133

Current liabilities

Financial liabilities

Trade payables

Dues to micro and small enterprises 23 0 - -

Dues to Others 23 6,006 5,498 5,252

Other financial liabilities 20 181 237 208

Other current liabilities 24 628 627 738

Provisions 21 387 290 229

TOTAL EQUITY AND LIABILITIES 14,751 13,920 13,339

Basis of preparation, measurement and significant

2
accounting policies

First time adoption of Ind AS 3

Contingent liabilities and commitments 25

The accompanying notes are an integral part of these financial statements

As per our report of even date For and on behalf of Board of Directors

For B S R & Co. LLP Sanjiv Mehta PB Balaji

Firm Registration No. 101248W/W - 100022 Managing Director and CEO Executive Director
Chartered Accountants [DIN: 06699923] (Finance & IT) and CFO
[DIN: 02762983]

Akeel Master Aditya Narayan Dev Bajpai

Partner Chairman - Audit Committee Executive Director
Membership No. 046768 [DIN: 00012084] Legal and Company Secretary
Membership No. FCS 3354
Aasif Malbari
Group Controller
Mumbai: 17th May, 2017 Mumbai: 17th May, 2017

Annual Report 2016-17 Hindustan Unilever Limited

76 Standalone

Statement of Profit and Loss

For the year ended 31st March, 2017
(All amounts in ` crores, unless otherwise stated)

Year ended Year ended

Particulars Note
31st March, 2017 31st March, 2016

INCOME

Revenue from operations 26 34,487 33,491

Other income 27 526 564

TOTAL INCOME 35,013 34,055

EXPENSES

Cost of materials consumed 28 11,363 11,267

Purchases of stock-in-trade 29 4,166 3,951

Changes in inventories of finished goods (including stock-in-trade) and work-in-progress 30 156 87

Excise duty 31 2,597 2,430

Employee benefits expenses 32 1,620 1,573

Finance costs 33 22 15

Depreciation and amortisation expenses 34 396 321

Other expenses 35 8,538 8,434

TOTAL EXPENSES 28,858 28,078

Profit before exceptional items and tax 6,155 5,977

Exceptional items 36 241 (31)

Profit before tax 6,396 5,946

Tax expenses

Current tax 10A (1,865) (1,816)

Deferred tax credit/(charge) 10A (41) 7

PROFIT FOR THE YEAR (A) 4,490 4,137

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 77

Statement of Profit and Loss

For the year ended 31st March, 2017
(All amounts in ` crores, unless otherwise stated)

Year ended Year ended

Particulars Note
31st March, 2017 31st March, 2016

OTHER COMPREHENSIVE INCOME

Items that will not be reclassified subsequently to profit or loss

Remeasurements of the net defined benefit plans 19C (32) (16)

Income tax relating to items that will not be reclassified subsequently to profit or loss

Remeasurements of the net defined benefit plans 10A 11 5

Items that will be reclassified subsequently to profit or loss

Fair value of debt instruments through other comprehensive income 19C 1 (2)

Income tax relating to items that will be reclassified subsequently to profit or loss

Fair value of debt instruments through other comprehensive income 10A (0) 1

OTHER COMPREHENSIVE INCOME FOR THE YEAR (B) (20) (12)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR (A+B) 4,470 4,125

Earnings per equity share

Basic (Face value of ` 1 each) 37 ` 20.75 ` 19.12

Diluted (Face value of ` 1 each) 37 ` 20.74 ` 19.11

Basis of preparation, measurement and significant accounting policies 2

First time adoption of Ind AS 3

The accompanying notes are an integral part of these financial statements

As per our report of even date For and on behalf of Board of Directors

For B S R & Co. LLP Sanjiv Mehta PB Balaji

Firm Registration No. 101248W/W - 100022 Managing Director and CEO Executive Director
Chartered Accountants [DIN: 06699923] (Finance & IT) and CFO
[DIN: 02762983]

Akeel Master Aditya Narayan Dev Bajpai

Partner Chairman - Audit Committee Executive Director
Membership No. 046768 [DIN: 00012084] Legal and Company Secretary
Membership No. FCS 3354
Aasif Malbari
Group Controller

Mumbai: 17th May, 2017 Mumbai: 17th May, 2017

Annual Report 2016-17 Hindustan Unilever Limited

78 Standalone

Statement of Changes in Equity

For the year ended 31st March, 2017
(All amounts in ` crores, unless otherwise stated)
A. EQUITY SHARE CAPITAL
Note Balance
As at 1st April, 2015 216
Changes in equity share capital during the year 0
As at 31st March, 2016 216
Changes in equity share capital during the year 0
As at 31st March, 2017 18 216
B. OTHER EQUITY
Reserves and Surplus Items of Other Comprehensive
Income (OCI)
Capital Capital Securities Employee General Retained Other Remeasurements Debt Total
Reserve Redemption Premium Stock Options Reserve Earnings Reserves of net defined instruments
Reserve Reserve Outstanding benefit plans through OCI
Account
As at 1st April, 2015 4 6 81 41 2,187 3,599 9 - 1 5,928
Profit for the year - - - - - 4,137 - - - 4,137
Other comprehensive income for - - - - - - - (11) (1) (12)
the year
Total comprehensive income for - - - - - 4,137 - (11) (1) 4,125
the year

Dividend on equity shares for the - - - - - (3,354) - - - (3,354)

year (Note: 38)
Dividend distribution tax (Note: 38) - - - - - (655) - - - (655)
Issue of equity shares on exercise of - - 17 (17) - - - - - -
employee stock options
Equity settled share based - - - 19 - - - - - 19
payment credit
As at 31st March, 2016 4 6 98 43 2,187 3,727 9 (11) 0 6,063
Profit for the year - - - - - 4,490 - - - 4,490
Other comprehensive income for - - - - - - (21) 1 (20)
the year
Total comprehensive income for - - - - - 4,490 - (21) 1 4,470
the year

Dividend on equity shares for the - - - - - (3,571) - - - (3,571)

year (Note: 38)
Dividend distribution tax(Note: 38) - - - - - (693) - - - (693)
Issue of equity shares on exercise - - 18 (18) - - - - - -
of employee stock options
Equity settled share based - - - 5 - - - - - 5
payment credit
As at 31st March, 2017 4 6 116 30 2,187 3,953 9 (32) 1 6,274
a) Refer note 19B for nature and purpose of reserves
b) The Scheme of Arrangement (Scheme) between the Company and its Members, envisages the transfer of balance of ` 2,187 crores standing to the credit
of General Reserves to the profit and Loss account (currently retained earnings). The Scheme, under relevant section of the Companies Act, 1956 and 2013,
was approved in Annual General Meeting held on 30th June, 2016 and is now pending for approval with National Company Law Tribunal (NCLT).

The accompanying notes are an integral part of these financial statements

As per our report of even date For and on behalf of Board of Directors
For B S R & Co. LLP Sanjiv Mehta PB Balaji
Firm Registration No. 101248W/W - 100022 Managing Director and CEO Executive Director (Finance & IT) and CFO
Chartered Accountants [DIN: 06699923] [DIN: 02762983]

Akeel Master Aditya Narayan Dev Bajpai

Partner Chairman - Audit Committee Executive Director
Membership No. 046768 [DIN: 00012084] Legal and Company Secretary
Membership No. FCS 3354
Aasif Malbari
Group Controller
Mumbai: 17th May, 2017 Mumbai: 17th May, 2017

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 79

Statement of Cash Flows

For the year ended 31st March, 2017
(All amounts in ` crores, unless otherwise stated)
Year ended Year ended
31st March, 2017 31st March, 2016
A CASH FLOW FROM OPERATING ACTIVITIES:
Profit before exceptional items and tax 6,155 5,977
Adjustments for:
Depreciation and amortisation expenses 396 321
(Gain)/loss on sale of non-current assets held for sale 13 18
Interest income (262) (331)
Dividend income (178) (166)
Fair value (gain)/loss on investments (86) (67)
Net (gain)/loss on sale of investments (0) (0)
Interest expense 22 15
Provision for expenses on emploee stock options 4 19
Impairment of non-current investments 8 -
Provision/(write back) for doubtful debts and advances (net) 4 (7)
Bad debts/assets written off 2 5
Mark-to-market (gain)/loss on derivative financial instruments 13 7
Cash Generated from operations before working capital changes 6,091 5,791

Adjustments for:
(Increase)/decrease in trade receivables 131 (279)
(Increase)/decrease in other non-current financial assets 20 (25)
(Increase)/decrease in other current financial assets (58) 81
(Increase)/decrease in other non-current assets (10) 8
(Increase)/decrease in other current assets (88) (83)
(Increase)/decrease in inventories 166 74
Increase/(decrease) in trade payables 508 166
Increase/(decrease) in other non-current financial liabilities 52 1
Increase/(decrease) in other current financial liabilities (71) 9
Increase/(decrease) in non-current provisions (37) 27
Increase/(decrease) in current provisions 61 (28)
Increase/(decrease) in other non-current liabilities (9) 48
Increase/(decrease) in other current liabilities 1 (112)
Cash generated from operations 6,757 5,678

Taxes paid (net of refunds) (1,783) (1,696)

Cash flow before exceptional items 4,974 3,982
Exceptional items:
Amounts paid for other restructuring activities (21) (8)
Net cash (used in) / generated from operating activities - [A] 4,953 3,974

B CASH FLOW FROM INVESTING ACTIVITIES:

Purchase of property, plant and equipment (1,024) (756)
Sale proceeds of property, plant and equipment 5 21
Purchase of Intangibles (348) (1)
Investment in equity shares of a joint venture - (15)
Purchase of non-current investments - (0)

Annual Report 2016-17 Hindustan Unilever Limited

80 Standalone

Statement of Cash Flows (ConTd.)

For the year ended 31st March, 2017
(All amounts in ` crores, unless otherwise stated)
Year ended Year ended
31st March, 2017 31st March, 2016
Sale proceeds of non-current investments 0 0
Purchase of current investments (26,230) (18,907)
Sale of current investments 25,260 19,236
Loans given to subsidiaries (84) (35)
Loans repaid by subsidiaries 48 53
Redemption/maturity of bank deposits (having original maturity of more than 3 months) 2,590 2,328
Investment in bank deposits (having original maturity of more than 3 months) (1,555) (2,625)
Investment in non-current deposits with banks (1) -
Redemption of non-current deposits with banks - 0
Interest received 266 324
Dividend received from subsidiaries 167 136
Dividend received from others 11 30
Cash flow before exceptional items (895) (211)
Exceptional items:
Consideration received on disposal of surplus properties 167 61
Consideration received on disposal of subsidiary/ business 20 161
Taxes paid for exceptional items (44) (62)
Net cash (used in) / generated from investing activities - [B] (752) (51)

C CASH FLOW FROM FINANCING ACTIVITIES:

Dividends paid (3,561) (3,342)
Dividend distribution tax paid (693) (655)
Amounts deposited in bank accounts towards unpaid dividends (10) (11)
Interest paid (0) (0)
Proceeds from share allotment under employee stock options/ performance share 0 0
schemes
Net cash (used in) / generated financing activities - [C] (4,264) (4,008)

Net increase/(decrease) in cash and cash equivalents - [A+B+C] (63) (85)

Add: Cash and cash equivalents at the beginning of the year (refer Note 14) 635 720
Cash and cash equivalents at the end of the year (refer Note 14) 572 635

Note: The above Statement of Cash Flows has been prepared under the Indirect Method as set out in Ind AS 7, Statement of Cash Flows.

The accompanying notes are an integral part of these financial statements

As per our report of even date For and on behalf of Board of Directors

For B S R & Co. LLP Sanjiv Mehta PB Balaji

Firm Registration No. 101248W/W - 100022 Managing Director and CEO Executive Director
Chartered Accountants [DIN: 06699923] (Finance & IT) and CFO
[DIN: 02762983]

Akeel Master Aditya Narayan Dev Bajpai

Partner Chairman - Audit Committee Executive Director
Membership No. 046768 [DIN: 00012084] Legal and Company Secretary
Membership No. FCS 3354
Aasif Malbari
Group Controller

Mumbai: 17th May, 2017 Mumbai: 17th May, 2017

Hindustan Unilever Limited Annual Report 2016-17


Notes
to the financial statements for the year ended 31st March, 2017
1 COMPANY INFORMATION
Hindustan Unilever Limited (the Company) is a public limited Company
domiciled in India with its registered office located at Unilever House,
B.D. Sawant Marg, Chakala, Andheri (East), Mumbai 400 099. The
Company is listed on the Bombay Stock Exchange (BSE) and the National
Stock Exchange (NSE). The Company is a market leader in the FMCG
business comprising primarily of Home Care, Personal Care, Foods and
Refreshments segments. The Company has manufacturing facilities
across the country and sells primarily in India through independent
distributors and modern trade.
2 BASIS OF PREPARATION, MEASUREMENT AND SIGNIFICANT
ACCOUNTING POLICIES are included in the following notes:
2.1 Basis of preparation and measurement
(a) Basis of preparation
These financial statements have been prepared in accordance with the
Indian Accounting Standards (hereinafter referred to as the Ind AS) as
notified by Ministry of Corporate Affairs pursuant to section 133 of the
Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting
Standards) Rules, 2015 and Companies (Indian Accounting Standards)
Amendment Rules, 2016.
These financial statements for the year ended 31st March, 2017 are
the first the Company has prepared under Ind AS. For all periods upto
and including the year ended 31st March, 2016 , the Company prepared
its financial statements in accordance with the accounting standards
notified under the section 133 of the Companies Act 2013, read together
with paragraph 7 of the Companies (Accounts) Rules, 2014 (hereinafter
referred to as Previous GAAP) used for its statutory reporting requirement
in India immediately before adopting Ind AS. The financial statements
for the year ended 31st March, 2016 and the opening Balance Sheet
as at 1st April, 2015 have been restated in accordance with Ind AS for
comparative information. Reconciliations and explanations of the effect
of the transition from Previous GAAP to Ind AS on the Companys Balance
Sheet, Statement of Profit and Loss and Statement of Cash Flows are
provided in note 3.
The financial statements have been prepared on accrual and going
concern basis. The accounting policies are applied consistently to all the
periods presented in the financial statements, including the preparation
of the opening Ind AS Balance Sheet as at 1st April, 2015 being the date
of transition to Ind AS. All assets and liabilities have been classified as
current or non current as per the Companys normal operating cycle and
other criteria as set out in the Division II of Schedule III to the Companies
Act, 2013. Based on the nature of products and the time between
acquisition of assets for processing and their realisation in cash and
cash equivalents, the Company has ascertained its operating cycle as 12
months for the purpose of current or non-current classification of assets
and liabilities.
Transactions and balances with values below the rounding off norm
adopted by the Company have been reflected as 0 in the relevant notes in
these financial statements.
The financial statements of the Company for the year ended 31st March,
2017 were approved for issue in accordance with the resolution of the
Board of Directors on 17th May, 2017.
(b) Basis of measurement
These financial statements are prepared under the historical cost
convention unless otherwise indicated.
Overview Reports Financial Statements 81
(All amounts in ` crores, unless otherwise stated)
2.2 KEY ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements requires management to make
judgments, estimates and assumptions in the application of accounting
policies that affect the reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates. Continuous
evaluation is done on the estimation and judgments based on historical
experience and other factors, including expectations of future events
that are believed to be reasonable. Revisions to accounting estimates are
recognised prospectively.
Information about critical judgments in applying accounting policies, as
well as estimates and assumptions that have the most significant effect to
the carrying amounts of assets and liabilities within the next financial year,
(a) Measurement of defined benefit obligations - Note 41
(b) Measurement and likelihood of occurrence of provisions and
contingencies - Note 21 and 25
(c) Recognition of deferred tax assets - Note 10
(d) Key assumptions used in discounted cash flow projections - Note 43
(e) Measurement of consideration and assets acquired as part of
business combination - Note 43
(f) Impairment of Intangibles - Note 5
2.3 RECENT ACCOUNTING DEVELOPMENTS
Standards issued but not yet effective:
In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian
Accounting Standards) (Amendments) Rules, 2017, notifying amendments to
Ind AS 7, Statement of cash flows and Ind AS 102, Share-based payment.
The amendments are applicable to the Company from April 1, 2017.
Amendment to Ind AS 7:
The amendment to Ind AS 7 requires the entities to provide disclosures
that enable users of financial statements to evaluate changes in liabilities
arising from financing activities, including both changes arising from cash
flows and non-cash changes, suggesting inclusion of a reconciliation
between the opening and closing balances in the balance sheet for liabilities
arising from financing activities, to meet the disclosure requirement. The
effect on the financial statements is being evaluated by the Company.
Amendment to Ind AS 102:
The amendment to Ind AS 102 provides specific guidance to measurement
of cash-settled awards, modification of cash-settled awards and awards
that include a net settlement feature in respect of withholding taxes.
It clarifies that the fair value of cash-settled awards is determined on a
basis consistent with that used for equity settled awards. Market-based
performance conditions and non-vesting conditions are reflected in the
fair values, but non-market performance conditions and service vesting
conditions are reflected in the estimate of the number of awards expected
to vest. Also, the amendment clarifies that if the terms and conditions of
a cash-settled share-based payment transaction are modified with the
result that it becomes an equity-settled share-based payment transaction,
the transaction is accounted for as such from the date of the modification.
Further, the amendment requires the award that include a net settlement
feature in respect of withholding taxes to be treated as equity-settled in its
entirety. The cash payment to the tax authority is treated as if it was part
of an equity settlement. The effect on the financial statements is being
evaluated by the Company.
Annual Report 2016-17 Hindustan Unilever Limited
82 Standalone
Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
2.4 SIGNIFICANT ACCOUNTING POLICIES
(a) Property, Plant and Equipment:
Property, plant and equipment is stated at acquisition cost net of
accumulated depreciation and accumulated impairment losses, if
any. Subsequent costs are included in the assets carrying amount or
recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the
Company and the cost of the item can be measured reliably. All other
repairs and maintenance are charged to the Statement of Profit and Loss
during the period in which they are incurred.
Gains or losses arising on retirement or disposal of property, plant and
equipment are recognised in the Statement of Profit and Loss.
Property, plant and equipment which are not ready for intended use as
on the date of Balance Sheet are disclosed as Capital work-in-progress.
Depreciation is provided on a pro-rata basis on the straight line method
based on estimated useful life prescribed under Schedule II to the
Companies Act, 2013 with the exception of the following:
plant and equipment is depreciated over 3 to 21 years based on the
technical evaluation of useful life done by the management.
assets costing ` 5,000 or less are fully depreciated in the year of
purchase.
Freehold land is not depreciated.
The residual values, useful lives and method of depreciation of property,
plant and equipment is reviewed at each financial year end and adjusted
prospectively, if appropriate.
Upon first-time adoption of Ind AS, the Company has elected to measure
all its property, plant and equipment at the Previous GAAP carrying
amount as its deemed cost on the date of transition to Ind AS i.e., 1st
April,2015.
(b) Intangible Assets:
Separately purchased intangible assets are initially measured at cost.
Intangible assets acquired in a business combination are recognised at
fair value at the acquisition date. Subsequently, intangible assets are
carried at cost less any accumulated amortisation and accumulated
impairmentlosses, if any.
The useful lives of intangible assets are assessed as either finite or
indefinite. Finite-life intangible assets are amortised on a straight-line
basis over the period of their expected useful lives. Estimated useful lives
by major class of finite-life intangible assets are as follows:
Design - 10 years
Know-how - 10 years
Computer software - 5 years
The amortisation period and the amortisation method for finite-life
intangible assets is reviewed at each financial year end and adjusted
prospectively, if appropriate.
Indefinite life intangibles mainly consist of brands/trademarks. The
assessment of indefinite life is reviewed annually to determine whether
the indefinite life continues, if not, it is impaired or changed prospectively
basis revised estimates.
Goodwill is initially recognised based on the accounting policy for business
combinations [refer note 2.4.(q)]. These assets are not amortised but are
tested for impairment annually.
Hindustan Unilever Limited Annual Report 2016-17
(All amounts in ` crores, unless otherwise stated)
Upon first-time adoption of Ind AS, the Company has elected to measure
its intangible assets at the Previous GAAP carrying amount as its deemed
cost on the date of transition to Ind AS i.e., 1st April,2015.
(c) Investments in Subsidiaries and Joint Venture:
Investments in subsidiaries and joint venture are carried at cost less
accumulated impairment losses, if any. Where an indication of impairment
exists, the carrying amount of the investment is assessed and written
down immediately to its recoverable amount. On disposal of investments
in subsidiaries and joint venture, the difference between net disposal
proceeds and the carrying amounts are recognized in the Statement of
Profit and Loss.
Upon first-time adoption of Ind AS, the Company has elected to measure
its investments in subsidiaries and joint ventures at the Previous GAAP
carrying amount as its deemed cost on the date of transition to Ind AS i.e.,
1st April,2015.
(d) Inventories:
Inventories are valued at the lower of cost and net realisable value. Cost is
computed on a weighted average basis. Cost of finished goods and work-
in-progress include all costs of purchases, conversion costs and other
costs incurred in bringing the inventories to their present location and
condition. The net realisable value is the estimated selling price in the
ordinary course of business less the estimated costs of completion and
estimated costs necessary to make the sale.
(e) Cash and Cash Equivalents:
Cash and cash equivalents are short-term (three months or less from the
date of acquisition), highly liquid investments that are readily convertible
into cash and which are subject to an insignificant risk of changes in value.
(f) Assets Held for Sale:
Non-current assets or disposal groups comprising of assets and liabilities
are classified as held for sale when all of the following criterias are
met: (i) decision has been made to sell. (ii) the assets are available for
immediate sale in its present condition. (iii) the assets are being actively
marketed and (iv) sale has been agreed or is expected to be concluded
within 12 months of the Balance Sheet date.
Subsequently, such non-current assets and disposal groups classified as
held for sale are measured at the lower of its carrying value and fair value
less costs to sell. Non-current assets held for sale are not depreciated or
amortised.
(g) Financial Instruments:
Financial Assets:
Financial assets are recognised when the Company becomes a party to the
contractual provisions of the instrument.
On initial recognition, a financial asset is recognised at fair value, in case of
Financial assets which are recognised at fair value through profit and loss
(FVTPL), its transaction cost are recognised in the statement of profit and
loss. In other cases, the transaction cost are attributed to the acquisition
value of the financial asset.
Financial assets are subsequently classified as measured at
amortised cost
fair value through profit and loss (FVTPL)
fair value through other comprehensive income (FVOCI).

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
Financial assets are not reclassified subsequent to their recognition,
except if and in the period the Company changes its business model for
managing financial assets.
Trade Receivables and Loans:
Trade receivables are initially recognised at fair value. Subsequently,
these assets are held at amortised cost, using the effective interest rate
(EIR) method net of any expected credit losses. The EIR is the rate that
discounts estimated future cash income through the expected life of
financial instrument.
Debt Instruments:
Debt instruments are initially measured at amortised cost, fair value
through other comprehensive income (FVOCI) or fair value through profit
or loss (FVTPL) till derecognition on the basis of (i) the entitys business
model for managing the financial assets and (ii) the contractual cash flow
characteristics of the financial asset.
(a) Measured at amortised cost: Financial assets that are held within a
business model whose objective is to hold financial assets in order to
collect contractual cash flows that are solely payments of principal
and interest, are subsequently measured at amortised cost using
the effective interest rate (EIR) method less impairment, if any.
The amortisation of EIR and loss arising from impairment, if any is
recognised in the Statement of Profit and Loss.
(b) Measured at fair value through other comprehensive income:
Financial assets that are held within a business model whose
objective is achieved by both, selling financial assets and collecting
contractual cash flows that are solely payments of principal and
interest, are subsequently measured at fair value through other
comprehensive income. Fair value movements are recognized in the
other comprehensive income (OCI). Interest income measured using
the EIR method and impairment losses, if any are recognised in the
Statement of Profit and Loss. On derecognition, cumulative gain or
loss previously recognised in OCI is reclassified from the equity to
other income in the Statement of Profit and Loss.
(c) Measured at fair value through profit or loss: A financial asset not
classified as either amortised cost or FVOCI, is classified as FVTPL.
Such financial assets are measured at fair value with all changes
in fair value, including interest income and dividend income if any,
recognised as other income in the Statement of Profit and Loss.
Equity Instruments:
All investments in equity instruments classified under financial assets are
initially measured at fair value , the Company may, on initial recognition,
irrevocably elect to measure the same either at FVOCI or FVTPL.
The Company makes such election on an instrument-by-instrument basis.
Fair value changes on an equity instrument is recognised as other income
in the Statement of Profit and Loss unless the Company has elected
to measure such instrument at FVOCI. Fair value changes excluding
dividends, on an equity instrument measured at FVOCI are recognised
in OCI. Amounts recognised in OCI are not subsequently reclassified to
the Statement of Profit and Loss. Dividend income on the investments in
equity instruments are recognised as other income in the Statement of
Profit and Loss.
Derecognition
The Company derecognises a financial asset when the contractual rights
to the cash flows from the financial asset expire, or it transfers the
contractual rights to receive the cash flows from the asset.
Overview Reports Financial Statements 83
(All amounts in ` crores, unless otherwise stated)
Impairment of Financial Asset
Expected credit losses are recognized for all financial assets subsequent
to initial recognition other than financials assets in FVTPL category.
For financial assets other than trade receivables, as per Ind AS 109, the
Company recognises 12 month expected credit losses for all originated
or acquired financial assets if at the reporting date the credit risk of the
financial asset has not increased significantly since its initial recognition.
The expected credit losses are measured as lifetime expected credit losses
if the credit risk on financial asset increases significantly since its initial
recognition. The Companys trade receivables do not contain significant
financing component and loss allowance on trade receivables is measured
at an amount equal to life time expected losses i.e. expected cash shortfall.
The impairment losses and reversals are recognised in Statement of Profit
and Loss.
Financial Liabilities:
Initial recognition and measurement
Financial liabilities are recognised when the Company becomes a party
to the contractual provisions of the instrument. Financial liabilities are
initially measured at the amortised cost unless at initial recognition,
they are classified as fair value through profit and loss. In case of trade
payables, they are initially recognised at fair value and subsequently, these
liabilities are held at amortised cost, using the effective interest method.
Subsequent measurement
Financial liabilities are subsequently measured at amortised cost using
the EIR method. Financial liabilities carried at fair value through profit or
loss are measured at fair value with all changes in fair value recognised in
the Statement of Profit and Loss.
Derecognition
A financial liability is derecognised when the obligation specified in the
contract is discharged, cancelled or expires.
(h) Provisions and Contingent Liabilities:
Provisions are recognised when the Company has a present obligation
(legal or constructive) as a result of a past event, it is probable that an
outflow of resources embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of the amount of the
obligation. Provisions are measured at the best estimate of the expenditure
required to settle the present obligation at the Balance Sheet date.
If the effect of the time value of money is material, provisions are
discounted to reflect its present value using a current pre-tax rate that
reflects the current market assessments of the time value of money and
the risks specific to the obligation. When discounting is used, the increase
in the provision due to the passage of time is recognised as a finance cost.
Contingent liabilities are disclosed when there is a possible obligation
arising from past events, the existence of which will be confirmed only by
the occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the Company or a present obligation that
arises from past events where it is either not probable that an outflow of
resources will be required to settle the obligation or a reliable estimate of
the amount cannot be made.
(i) Revenue Recognition:
Revenue from sale of goods is recognised when all the significant risks
and rewards of ownership in the goods are transferred to the buyer as per
the terms of the contract, there is no continuing managerial involvement
Annual Report 2016-17 Hindustan Unilever Limited
84 Standalone
Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
with the goods and the amount of revenue can be measured reliably. The
Company retains no effective control of the goods transferred to a degree
usually associated with ownership and no significant uncertainty exists
regarding the amount of the consideration that will be derived from the sale
of goods. Revenue is measured at fair value of the consideration received
or receivable, after deduction of any trade discounts, volume rebates and
any taxes or duties collected on behalf of the government which are levied
on sales such as sales tax, value added tax, etc.
Income from export incentives such as duty drawback and premium on sale
of import licenses, and lease license fee are recognised on accrual basis.
Income from services rendered is recognised based on agreements/
arrangements with the customers as the service is performed in proportion
to the stage of completion of the transaction at the reporting date and the
amount of revenue can be measured reliably.
Interest income is recognized using the effective interest rate (EIR) method.
Dividend income on investments is recognised when the right to receive
dividend is established.
(j) Expenditure:
Expenses are accounted on accrual basis.
(k) Employee Benefits:
Defined contribution plans
Contributions to defined contribution schemes such as employees state
insurance, labour welfare fund, superannuation scheme, employee
pension scheme etc. are charged as an expense based on the amount of
contribution required to be made as and when services are rendered by the
employees. Companys provident fund contribution, in respect of certain
employees, is made to a government administered fund and charged
as an expense to the Statement of Profit and Loss. The above benefits
are classified as Defined Contribution Schemes as the Company has no
further defined obligations beyond the monthly contributions.
Defined benefit plans
In respect of certain employees, provident fund contributions are made
to a trust administered by the Company. The interest rate payable to the
members of the trust shall not be lower than the statutory rate of interest
declared by the Central Government under the Employees Provident
Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall
be made good by the Company. The liability in respect of the shortfall of
interest earnings of the Fund is determined on the basis of an actuarial
valuation. The Company also provides for retirement/post-retirement
benefits in the form of gratuity, pensions (in respect of certain employees),
compensated absences (in respect of certain employees) and medical
benefits including to the employees of Indian subsidiaries and a subsidiary
of parent Company.
For defined benefit plans, the amount recognised as Employee benefit
expenses in the Statement of Profit and Loss is the cost of accruing
employee benefits promised to employees over the year and the costs
of individual events such as past/future service benefit changes and
settlements (such events are recognised immediately in the Statement of
Profit and Loss). The amount of net interest expense calculated by applying
the liability discount rate to the net defined benefit liability or asset is
charged or credited to Finance costs in the Statement of Profit and Loss.
Any differences between the interest income on plan assets and the return
actually achieved, and any changes in the liabilities over the year due to
changes in actuarial assumptions or experience adjustments within the
plans, are recognised immediately in Other comprehensive income and
subsequently not reclassified to the Statement of Profit and Loss.
Hindustan Unilever Limited Annual Report 2016-17
(All amounts in ` crores, unless otherwise stated)
The defined benefit plan surplus or deficit on the Balance Sheet comprises
the total for each plan of the fair value of plan assets less the present
value of the defined benefit liabilities (using a discount rate by reference
to market yields on government bonds at the end of the reporting period).
All defined benefit plans obligations are determined based on valuations, as
at the Balance Sheet date, made by independent actuary using the projected
unit credit method. The classification of the Companys net obligation into
current and non-current is as per the actuarial valuation report.
Termination benefits
Termination benefits, in the nature of voluntary retirement benefits or
termination benefits arising from restructuring, are recognised in the
Statement of Profit and Loss. The Company recognises termination
benefits at the earlier of the following dates:
(a) when the Company can no longer withdraw the offer of those
benefits; or
(b) when the Company recognises costs for a restructuring that is within
the scope of Ind AS 37 and involves the payment of termination
benefits.
Benefits falling due more than 12 months after the end of the reporting
period are discounted to their present value
Share-Based Payments:
Employees of the Company receive remuneration in the form of share-
based payments in consideration of the services rendered.
Under the equity settled share based payment, the fair value on the
grant date of the awards given to employees is recognised as employee
benefit expenses with a corresponding increase in equity over the vesting
period. The fair value of the options at the grant date is calculated by
an independant valuer basis Black Scholes model. At the end of each
reporting period, apart from the non market vesting condition, the expense
is reviewed and adjusted to reflect changes to the level of options expected
to vest. When the options are exercised, the Company issues fresh equity
shares.
For cash-settled share based payments, the fair value of the amount
payable to employees is recognised as employee benefit expenses with a
corresponding increase in liabilities, over the period of non market vesting
conditions getting fulfilled. The liability is remeasured at each reporting
period up to, and including the settlement date, with changes in fair value
recognised in employee benefits expenses. Refer Note 42 for details.
(l) Impairment of Non-Financial Assets:
Assessment for impairment is done at each Balance Sheet date as to
whether there is any indication that a non-financial asset may be impaired.
Indefinite life intangibles are subject to a review for impairment annually
or more frequently if events or circumstances indicate that it is necessary.
For the purpose of assessing impairment, the smallest identifiable
group of assets that generates cash inflows from continuing use that are
largely independent of the cash inflows from other assets or groups of
assets is considered as a cash generating unit. Goodwill acquired in a
business combination is, from the acquisition date, allocated to each of
the Companys cash-generating units that are expected to benefit from
the synergies of the combination, irrespective of whether other assets or
liabilities of the acquiree are assigned to those units.
If any indication of impairment exists, an estimate of the recoverable
amount of the individual asset/cash generating unit is made. Asset/cash
generating unit whose carrying value exceeds their recoverable amount
are written down to the recoverable amount by recognising the impairment

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
loss as an expense in the Statement of Profit and Loss. The impairment
loss is allocated first to reduce the carrying amount of any goodwill (if any)
allocated to the cash generating unit and then to the other assets of the unit,
pro rata based on the carrying amount of each asset in the unit. Recoverable
amount is higher of an assets or cash generating units fair value less
cost of disposal and its value in use. Value in use is the present value of
estimated future cash flows expected to arise from the continuing use of an
asset or cash generating unit and from its disposal at the end of its useful
life. Assessment is also done at each Balance Sheet date as to whether
there is any indication that an impairment loss recognised for an asset in
prior accounting periods may no longer exist or may have decreased, basis
the assessment a reversal of an impairment loss for an asset other than
goodwill is recognised in the Statement of Profit and Loss account.
(m) Income Taxes:
Income tax expense for the year comprises of current tax and deferred tax.
It is recognised in the Statement of Profit and Loss except to the extent
it relates to a business combination or to an item which is recognised
directly in equity or in other comprehensive income.
Current tax is the expected tax payable/receivable on the taxable income/
loss for the year using applicable tax rates at the Balance Sheet date, and
any adjustment to taxes in respect of previous years. Interest income/
expenses and penalties, if any, related to income tax are included in
current tax expense.
Deferred tax is recognised in respect of temporary differences between the
carrying amount of assets and liabilities for financial reporting purposes
and the corresponding amounts used for taxation purposes.
A deferred tax liability is recognised based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted, or substantively enacted, by the end of the
reporting period. Deferred tax assets are recognised only to the extent that
it is probable that future taxable profits will be available against which the
asset can be utilised. Deferred tax assets are reviewed at each reporting
date and reduced to the extent that it is no longer probable that the related
tax benefit will be realised.
Current tax assets and current tax liabilities are offset when there is a
legally enforceable right to set off the recognised amounts and there is
an intention to settle the asset and the liability on a net basis. Deferred
tax assets and deferred tax liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities;
and the deferred tax assets and the deferred tax liabilities relate to income
taxes levied by the same taxation authority.
(n) Leases:
Leases in which a substantial portion of the risks and rewards of ownership
are retained by the lessor are classified as operating leases. Payments and
receipts under such leases are recognised to the Statement of Profit and
Loss on a straight-line basis over the term of the lease unless the lease
payments to the lessor are structured to increase in line with expected
general inflation to compensate for the lessors expected inflationary cost
increases, in which case the same are recognised as an expense in line
with the contractual term.
Leases are classified as finance leases whenever the terms of the lease transfer
substantially all the risks and rewards incidental to ownership to the lessee.
(o) Foreign Currencies:
The financial statements are presented in INR, the functional currency of
the Company. Items included in the financial statements of the Company
are recorded using the currency of the primary economic environment in
which the Company operates (the functional currency).
Overview Reports Financial Statements 85
(All amounts in ` crores, unless otherwise stated)
Foreign currency transactions are translated into the functional currency
using exchange rates at the date of the transaction. Foreign exchange gains
and losses from settlement of these transactions, and from translation of
monetary assets and liabilities at the reporting date exchange rates are
recognised in the Statement of Profit and Loss.
(p) Earnings Per Share:
Basic earnings per share is computed by dividing the net profit for the period
attributable to the equity shareholders of the Company by the weighted
average number of equity shares outstanding during the period. The weighted
average number of equity shares outstanding during the period and for all
periods presented is adjusted for events, such as bonus shares, other than the
conversion of potential equity shares that have changed the number of equity
shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit for
the period attributable to equity shareholders and the weighted average
number of shares outstanding during the period is adjusted for the effects
of all dilutive potential equity shares.
(q) Business Combination:
Business combinations are accounted for using the acquisition accounting
method as at the date of the acquisition, which is the date at which control
is transferred to the Company. The consideration transferred in the
acquisition and the identifiable assets acquired and liabilities assumed
are recognised at fair values on their acquisition date. Goodwill is initially
measured at cost, being the excess of the aggregate of the consideration
transferred and the amount recognised for non-controlling interests, and
any previous interest held, over the net identifiable assets acquired and
liabilities assumed. The Company recognises any non-controlling interest
in the acquired entity on an acquisition-by-acquisition basis either at
fair value or at the non-controlling interests proportionate share of the
acquired entitys net identifiable assets. Consideration transferred does
not include amounts related to settlement of pre-existing relationships.
Such amounts are recognised in the Statement of Profit and Loss.
Transaction costs are expensed as incurred, other than those incurred
in relation to the issue of debt or equity securities. Any contingent
consideration payable is measured at fair value at the acquisition date.
Subsequent changes in the fair value of contingent consideration are
recognised in the Statement of Profit and Loss.
In accordance with Ind AS 101 provisions related to first time adoption, the
Company has elected to apply Ind AS accounting for business combinations
prospectively from 1st April 2015. As such, Previous GAAP balances relating
to business combinations entered into before that date, including goodwill,
have been carried forward as at the date of transition to Ind AS.
3. FIRST TIME ADOPTION OF IND AS
The Company has adopted Indian Accounting Standards (Ind AS) as notified
by the Ministry of Corporate Affairs with effect from 1st April, 2016, with a
transition date of 1st April, 2015. These financial statements for the year
ended 31st March, 2017 are the first financial statements the Company
has prepared under Ind AS. For all periods upto and including the year
ended 31st March, 2016 , the Company prepared its financial statements
in accordance with the accounting standards notified under the section
133 of the Companies Act 2013, read together with paragraph 7 of the
Companies (Accounts) Rules, 2014 (Previous GAAP).
The adoption of Ind AS has been carried out in accordance with Ind AS 101,
First-time Adoption of Indian Accounting Standards. Ind AS 101 requires
that all Ind AS standards and interpretations that are issued and effective
for the first Ind AS financial statements be applied retrospectively and
Annual Report 2016-17 Hindustan Unilever Limited
86 Standalone
Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
consistently for all financial years presented. Accordingly, the Company
has prepared financial statements which comply with Ind AS for year
ended 31st March, 2017, together with the comparative information as at
and for the year ended 31st March, 2016 and the opening Ind AS Balance
Sheet as at 1st April, 2015, the date of transition to Ind AS.
In preparing these Ind AS financial statements, the Company has availed
certain exemptions and exceptions in accordance with Ind AS 101, as
explained below. The resulting difference between the carrying values of
the assets and liabilities in the financial statements as at the transition
date under Ind AS and Previous GAAP have been recognised directly in
equity (retained earnings or another appropriate category of equity). This
note explains the adjustments made by the Company in restating its
financial statements prepared under previous GAAP, including the Balance
Sheet as at 1st April, 2015 and the financial statements as at and for the
year ended 31st March, 2016.
A. Optional Exemptions from retrospective application
Ind AS 101 permits first-time adopters certain exemptions from
retrospective application of certain requirements under Ind AS. The
Company has elected to apply the following optional exemptions from
retrospective application:
(i) Business combinations
Ind AS 103 Business Combinations has not been applied to acquisitions of
subsidiaries, or of interests in associates and joint ventures and transactions
which are considered businesses for Ind AS, that occurred before 1st
April, 2015. The carrying amounts of assets and liabilities in accordance
with Previous GAAP are considered as their deemed cost at the date of
acquisition. After the date of the acquisition, measurement is in accordance
with Ind AS. The carrying amount of goodwill in the opening Ind AS Balance
Sheet is its carrying amount in accordance with the Previous GAAP.
(ii) Deemed cost for property, plant and equipment and intangible
assets
The Company has elected to measure all its property, plant and equipment
and intangible assets at the Previous GAAP carrying amount as its deemed
cost on the date of transition to Ind AS.
(iii) Investments in subsidiaries and joint ventures
The Company has elected to measure its investments in subsidiaries and
Hindustan Unilever Limited Annual Report 2016-17
(All amounts in ` crores, unless otherwise stated)
joint ventures at the Previous GAAP carrying amount as its deemed cost on
the date of transition to Ind AS.
(iv) Share-based payments
The Company has elected not to apply Ind AS 102 Share-Based Payment,
to equity instruments that vested prior to the date of transition to Ind AS.
B. Mandatory Exceptions from retrospective application
The Company has applied the following exceptions to the retrospective
application of Ind AS as mandatorily required under Ind AS 101:
(i) Estimates
On assessment of the estimates made under the Previous GAAP financial
statements, the Company has concluded that there is no necessity to
revise the estimates under Ind AS, as there is no objective evidence of an
error in those estimates. However, estimates that were required under Ind
AS but not required under Previous GAAP are made by the Company for
the relevant reporting dates reflecting conditions existing as at that date.
(ii) Classification and measurement of financial assets
The classification of financial assets to be measured at amortised cost or
fair value through other comprehensive income is made on the basis of the
facts and circumstances that existed on the date of transition to Ind AS.
C. Transition to Ind AS - Reconciliations
The following reconciliations provide the explanations and quantification of
the differences arising from the transition from Previous GAAP to Ind AS in
accordance with Ind AS 101:
I. Reconciliation of Equity as at 1st April, 2015
II. A. Reconciliation of Equity as at 31st March, 2016
B. Reconciliation of Statement of Profit and Loss for the year ended
31st March, 2016
III. Adjustments to Statement of Cash Flows for the year ended 31st
March, 2016
Previous GAAP figures have been reclassified/regrouped wherever
necessary to conform with financial statements prepared under Ind AS.
 Overview Reports Financial Statements 87

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
I. Reconciliation of Equity as at 1st April, 2015

Note Previous GAAP Ind AS adjustments Ind AS

ASSETS
Non-current assets
Property, plant and equipment 2,435 2,435
Capital work-in-progress 479 479
Other intangible assets 22 22
Investments in subsidiaries, associates and joint ventures 298 298
Financial assets
Investments (a) 356 (350) 6
Loans 180 180
Other financial assets 108 108
Non current tax assets (net) 252 252
Deferred tax assets (net) (g) 196 (41) 155
Other non-current assets 44 44
Current assets
Inventories 2,603 2,603
Financial assets
Investments (b) 2,630 94 2,724
Trade receivables 783 783
Cash and cash equivalents (b) 720 0 720
Bank balances other than cash and cash equivalents above 1,818 1,818
Other financial assets (c) 322 1 323
Other current assets 380 380
Assets held for sale 9 9
TOTAL 13,635 (296) 13,339
EQUITY AND LIABILITIES
Equity
Equity share capital 216 216
Other equity (a), (b), (d), 3,509 2,419 5,928
(e) ,(f), (g),
(k)
Liabilities
Non-current liabilities
Financial liabilities
Other financial liabilities 18 18
Provisions (a), (k) 829 (347) 482
Non current tax liabilities (net) 135 135
Other non-current liabilities (e) 152 (19) 133
Current liabilities
Financial liabilities
Trade payables
Dues to micro and small enterprises - -
Dues to others 5,252 5,252
Other financial liabilities (c) 207 1 208
Other current liabilities 738 738
Provisions (a), (d) 2,579 (2,350) 229
TOTAL 13,635 (296) 13,339

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Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
II. A. Reconciliation of Equity as at 31st March, 2016

Note Previous GAAP Ind AS adjustments Ind AS

ASSETS
Non-current assets
Property, plant and equipment 2,902 2,902
Capital work-in-progress 386 386
Other intangible assets 12 12
Investment in subsidiaries, associates and joint venture 313 313
Financial assets
Investments (a) 356 (350) 6
Loans 162 162
Other financial assets 132 132
Non-current tax assets (net) 246 246
Deferred tax assets (net) (g) 232 (64) 168
Other non-current assets 41 41
Current assets
Inventories 2,528 2,528
Financial assets
Investments (b) 2,298 163 2,461
Trade receivables 1,064 1,064
Cash and cash equivalents 635 635
Bank balances other than cash and cash equivalents above 2,124 2,124
Other financial assets (c) 250 3 253
Other current assets 465 465
Assets held for sale 22 22
TOTAL 14,168 (248) 13,920
EQUITY AND LIABILITIES
Equity
Equity share capital 216 216
Other equity (a), (b), (d), 3,471 2,592 6,063
(e) ,(f), (g),
(k)
Liabilities
Non-current liabilities
Financial liabilities
Other financial liabilities 19 19
Provisions (a), (k) 939 (345) 594
Non-current tax liabilities (net) 193 193
Other non-current liabilities (e) 200 (17) 183
Current liabilities
Financial liabilities
Trade payables
Dues to micro and small enterprises - -
Dues to others 5,498 5,498
Other financial liabilities (c) 234 3 237
Other-current liabilities 627 627
Provisions (a), (d) 2,771 (2,481) 290
TOTAL 14,168 (248) 13,920

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 89

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
II. B. Reconciliation of Statement of Profit and Loss for the year ended 31st March, 2016

Note Previous GAAP Ind AS adjustments Ind AS

Revenue from operations (h), (i) 31,987 1,504 33,491

Other income (b), (j) 501 63 564

TOTAL INCOME 32,488 1,567 34,055

EXPENSES

Cost of materials consumed 11,267 11,267

Purchases of stock-in-trade 3,951 3,951


Changes in inventories of finished goods (including stock-in- 87 87
trade) and work-in-progress

Excise duty (h) - 2,430 2,430

Employee benefits expenses (e) , (f), (l) 1,592 (19) 1,573

Finance costs (a), (e) , (l) 0 15 15

Depreciation and amortisation expenses 321 321

Other expenses (i) 9,360 (926) 8,434

TOTAL EXPENSES 26,578 1,500 28,078

Profit before exceptional items and tax 5,910 67 5,977

Exceptional items (k), (l) (39) 8 (31)

Profit before tax 5,871 75 5,946

Tax expenses

Current tax (j) (1,823) 7 (1,816)

Deferred tax credit/(charge) (g) 35 (28) 7

PROFIT FOR THE YEAR (A) 4,083 54 4,137

OTHER COMPREHENSIVE INCOME

Items that will not be reclassified to profit or loss

Remeasurements of the net defined benefit plans (a), (l) - (16) (16)

Income tax relating to items that will not be reclassified to -

profit or loss

Remeasurements of the net defined benefit plans (g) - 5 5

Items that will be reclassified to profit or loss -


Fair value of debt instruments through other comprehensive (b) - (2) (2)
income

Income tax relating to items that will be reclassified to profit -

or loss


Fair value of debt instruments through other comprehensive (g) - 1 1
income

OTHER COMPREHENSIVE INCOME FOR THE YEAR (B) - (12) (12)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR (A+B) 4,083 42 4,125

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Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
III. Adjustments to Statement of Cash flows
There were no material differences between the Statement of Cash Flows presented under Ind AS and the Previous GAAP.
Notes to the Reconciliations
(a) Investment in Controlled Trust
Under Previous GAAP, the investment in the Hindustan Unilever Limited Securitisation of Retirement Benefit Trust (HURB Trust) did not qualify as
plan asset under AS 15 and accordingly presented as non-current investment. Under Ind AS, the HURB Trust qualifies as a plan asset. Accordingly, the
plan asset has been fair valued as per actuarial valuation carried in accordance with Ind AS on date of transition to Ind AS and as at each balance sheet
date. The plan asset recognised has been netted off against provision for employee benefits. The interest income and remeasurement gain/(loss) on the
recognised plan asset has been recognised in Statement of Profit and Loss and Other Comprehensive Income respectively.

Debit / (Credit) Debit / (Credit)

Balance Sheet Statement of
profit and loss
As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016
Asset:
Investments (Non-current) (350) (350) -
Liability:
Provisions (Non-current) 347 339 -
Provisions (Current) 6 7 -
Equity:
Other equity (Retained earnings) (3) 4 -
(Profit)/Loss:
Finance cost - - (5)
Remeasurement (gain)/loss on net defined benefit plans - - 13
(b) Current Investments
i. Investments in treasury bills and government securities - Under Previous GAAP, the investments in treasury bills and government securities were
measured at cost or market value, whichever is lower. Under Ind AS, the Company has designated these investments as fair value through other
comprehensive income (FVOCI). Accordingly, these investments are required to be measured at fair value. At the date of transition to Ind AS, difference
between the fair value of the investments and carrying value under previous GAAP has been recognised in Other equity (Retained earnings for interest
income component and Debt instruments through Other Comprehensive Income for fair value change). Interest income and fair value changes are
recognised in the Statement of Profit and Loss and Other Comprehensive Income respectively for the year ended 31st March, 2016.
ii. Mutual funds - Under Previous GAAP, the mutual funds were measured at cost or market value, whichever is lower. Under Ind AS, the Company has
designated these investments at fair value through profit or loss (FVTPL). Accordingly, these investments are required to be measured at fair value. At
the date of transition to Ind AS, difference between the fair value of the instruments and the carrying value under Previous GAAP has been recognised
in retained earnings. Fair value changes are recognised in the Statement of Profit and Loss for the year ended 31st March, 2016.

Debit / (Credit) Debit / (Credit)

Balance Sheet Statement of
profit and loss
As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016
Asset:
Investments (Current) 94 163 -
Cash and cash equivalents 0 - -
Equity:
Other equity (Retained earnings) (92) (163) -
Other equity (Debt instruments through other comprehensive income) (2) (0) -
(Profit)/Loss:
Other income - - (70)
(Gain)/loss on debt instruments through other comprehensive income - - 2

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 91

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
(c) Derivative Instruments - Foreign Exchange Forward Contracts
Under Previous GAAP, unrealised net loss on foreign exchange forward contracts, if any, as at each Balance Sheet date was provided for. Under Ind
AS, foreign exchange forward contracts are mark-to-market as at Balance Sheet date and unrealised net gain or loss is recognised in profit and loss
statement. Derivative assets and derivative liabilities are presented on gross basis.

Debit / (Credit) Debit / (Credit)

Balance Sheet Statement of
profit and loss
As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016
Asset:
Other financial assets (Current) 1 3 -
Liability:
Other financial liabilities (Current) (1) (3) -

(d) Proposed Dividend

Under Previous GAAP, proposed dividends and related dividend distribution tax was recognised as a provision in the year to which they relate, irrespective
of when they are declared. Under Ind AS, dividends and related dividend distribution tax are recognised as a liability in the year in which it is approved by
the shareholders in the Annual General Meeting of the Company.

Debit / (Credit) Debit / (Credit)

Balance Sheet Statement of
profit and loss
As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016
Equity:
Other equity (Retained earnings) (2,344) (2,474) -
Liability:
Provisions (Current) 2,344 2,474 -

(e) Other Non-Current Liabilities

Under Previous GAAP, non-current liabilities were recognised on undiscounted basis. Ind AS requires such liabilities to be recognised at present value
(discounted value) where the effect of time value of money is material. This led to a decrease in the value of non-current liabilities on the date of transition
which was adjusted against retained earnings. Ind AS also provides that where discounting is used, the carrying amount of the liability increases in each
period to reflect the passage of time. This increase is recognised as finance cost. The interest cost on unwinding of discount and impact of change in
discount rate are recognised in the Statement of Profit and Loss under Finance costs and employee benefit expenses respectively for the year ended
31st March, 2016.

Debit / (Credit) Debit / (Credit)

Balance Sheet Statement of
profit and loss
As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016
Equity:
Other equity (Retained earnings) (19) (17) -
Liability:
Other non-current liabilities 19 17 -
(Profit)/Loss:
Employee benefits expenses - - 0
Finance costs - - 2

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92 Standalone

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
(f) Employee Stock Option Plan
Under Previous GAAP, the intrinsic value of the employee stock option plan was recognised as an expense over the vesting period. Under Ind AS, the
compensation cost of employee stock option plan is recognised based on the fair value of the options determined using an appropriate pricing model
at the date of grant. The reduction in employee compensation cost for the unvested options as on the date of transition based on fair value method has
been adjusted against retained earnings. The impact for the year ended 31st March, 2016 has been recognised in Employee benefits expenses in the
Statement of Profit and Loss.

Debit / (Credit) Debit / (Credit)

Balance Sheet Statement of
profit and loss
As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016
Equity:
Other equity (Securities Premium Reserve) - 1 -
Other equity (Employee Stock Options Outstanding Account) 2 1 -
Other equity (Retained earnings) (2) (2) -
(Profit)/Loss:
Employee benefits expenses - - (0)
(g) Deferred Taxes
Under Previous GAAP, deferred taxes were recognised for the tax effect of timing differences between accounting profit and taxable profit for the year
using the income statement approach. Under Ind AS, deferred taxes are recognised using the balance sheet for future tax consequences of temporary
differences between the carrying value of assets and liabilities and their respective tax bases. The above difference, together with the consequential
tax impact of the other Ind AS transitional adjustments lead to temporary differences. Deferred tax adjustments are recognised in correlation to the
underlying transaction either in retained earnings or through other comprehensive income.

Debit / (Credit) Debit / (Credit)

Balance Sheet Statement of
profit and loss
As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016
Asset:
Deferred tax assets (net) (41) (64)
Equity:
Other equity (Retained earnings) 40 64
Other equity (Debt instruments through Other Comprehensive Income) 1 0
(Profit)/Loss:
Deferred tax (credit)/charge 28
Income tax relating to
Remeasurement (gain)/loss on net defined benefit plans (5)
(Gain)/loss on debt instruments through other comprehensive income (1)

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 93

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
(h) Excise Duty
Under Previous GAAP, excise duty was netted off against sale of goods. However, under Ind AS, excise duty is included in sale of goods and is separately
presented as expense on the face of Statement of Profit and Loss. Thus, sale of goods under Ind AS has increased with a corresponding increase in
expenses.

Debit / (Credit) Debit / (Credit)

Balance Sheet Statement of
profit and loss
As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016
(Profit)/Loss:
Revenue from operations - - (2,430)
Excise duty - - 2,430
(i) Revenue from Sale of Goods
Under Previous GAAP, revenue was recognised net of trade discounts, rebates, sales taxes and excise duties. Under Ind AS, revenue is recognised at the
fair value of the consideration received or receivable, after deduction of any trade discounts, volume rebates and any taxes or duties collected on behalf
of the government such as sales tax and value added tax except excise duty. Discounts given include rebates, price reductions and incentives given to
customers, promotional couponing and trade communication costs which have been reclassified from advertising and sales promotion within other
expenses under Previous GAAP and netted from revenue under Ind AS.

Debit / (Credit) Debit / (Credit)

Balance Sheet Statement of
profit and loss
As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016
(Profit)/Loss:
Revenue from operations - - 926
Other expenses - - (926)
(j) Interest on Income Tax Refund
Under Previous GAAP, the interest on income tax refund was recognised as other income. Under Ind AS, the Company has adopted the accounting
policy to recognise interest income/expense related to income tax as part of income tax expense. Accordingly, the interest on income tax refund has been
reclassified from other income to tax expenses - current tax for the year ended 31st March, 2016.

Debit / (Credit) Debit / (Credit)

Balance Sheet Statement of
profit and loss
As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016
(Profit)/Loss:
Other income - - 7
Tax expenses - current tax - - (7)
(k) Non-Current Provisions
Under Previous GAAP, non-current provisions were recognised on undiscounted basis. Ind AS requires such provisions to be recognised at present value
(discounted value) where the effect of time value of money is material. This led to a decrease in the value of non-current provisions for the year ended
31st March,2016 which was recognised in Exceptional items in the Statement of Profit and Loss where the underlying provision was initially recognised.
Subsequently, the present value is increased to reflect passage of time by recognising finance cost.

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94 Standalone

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

Debit / (Credit) Debit / (Credit)

Balance Sheet Statement of
profit and loss
As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016
Equity:
Other equity (Retained earnings) - (6) -
Liability:
Provisions (Non-current) - 6 -
(Profit)/Loss:
Exceptional items - - (6)
(l) Defined Benefit Plans
i. Actuarial gain/(loss) - Under Previous GAAP, the actuarial gain/(loss) of defined benefit plans had been recognised in Statement of Profit and Loss
as an exceptional item. Under Ind AS, the remeasurement gain/(loss) on net defined benefit plans is recognised in Other Comprehensive Income
net of tax.
ii. Net interest cost on defined benefit plans - Under Previous GAAP, the interest cost on defined benefit liability and expected return on plan assets
was recognised as employee benefit expenses in the Statement of Profit and Loss. Under Ind AS, the Company has recognised the net interest cost
on defined benefit plans as finance cost.

Debit / (Credit) Debit / (Credit)

Balance Sheet Statement of
profit and loss
As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016
(Profit)/Loss:
Employee benefits expenses - - (19)
Finance costs - - 18
Exceptional items - - (2)
Remeasurement (gain)/loss on net defined benefit plans - - 3

4 PROPERTY, PLANT AND EQUIPMENT

Refer Note 2.4 (a) for accounting policy on Property, Plant and Equipment
A Property, Plant and Equipment

Land Plant and Furniture Office

Buildings Vehicles Total
- Freehold - Leasehold equipment and fixtures equipment

Gross Block
Balance as at 1st April, 2015 (Deemed Cost) 59 27 797 1,496 36 0 20 2,435
Additions 0 0 102 709 7 0 25 843
Disposals (1) - (27) (48) - (0) (7) (83)
Balance as at 31st March, 2016 58 27 872 2,157 43 0 38 3,195
Additions - - 279 848 7 0 22 1,156

Disposals (0) (0) (6) (24) (1) - (1) (32)

Balance as at 31st March, 2017 58 27 1,145 2,981 49 0 59 4,319

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 95

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

Land Plant and Furniture Office

Buildings Vehicles Total
- Freehold - Leasehold equipment and fixtures equipment

Accumulated Depreciation
Balance as at 1st April, 2015 - - - - - - - -
Additions - 0 33 258 8 0 11 310
Disposals - - (0) (15) - (0) (2) (17)
Balance as at 31st March, 2016 - 0 33 243 8 0 9 293
Additions - 0 38 325 9 0 12 384
Disposals - (0) (1) (10) (1) - (0) (12)
Balance as at 31st March, 2017 - 0 70 558 16 0 21 665
Net Block
Balance as at 1st April, 2015 59 27 797 1,496 36 0 20 2,435
Balance as at 31st March, 2016 58 27 839 1,914 35 0 29 2,902
Balance as at 31st March, 2017 58 27 1,075 2,423 33 0 38 3,654
The Company has elected to measure all its property, plant and equipement at the previous GAAP carrying amount i.e 31st March 2015 as its deemed
cost (Gross Block Value) on the date of transition to Ind AS i.e 1st April 2015. The movement in carrying value of property, plant and equipement as per
IGAAP is mentioned below:
Land Plant and Furniture Office
Buildings Vehicles Total
- Freehold - Leasehold equipment and fixtures equipment

Gross Block
Balance as at 1st April, 2015 (IGAAP) 59 32 1,076 3,060 83 1 97 4,408
Additions - - 102 709 7 - 25 843
Disposals (1) - (29) (142) (1) (0) (10) (183)
Balance as at 31st March, 2016 58 32 1,149 3,627 89 1 112 5,068
Additions - - 279 848 7 - 22 1,156
Disposals (0) (0) (8) (82) (5) (0) (6) (101)
Balance as at 31st March, 2017 58 32 1,420 4,393 91 1 128 6,123
Accumulated Depreciation
Balance as at 1st April, 2015 0 5 279 1,564 47 1 77 1,973
Additions - 0 33 259 8 0 10 310
Disposals - - (2) (110) (1) (0) (4) (117)
Balance as at 31st March, 2016 0 5 310 1,713 54 1 83 2,166
Additions - 0 38 325 9 - 12 384
Disposals - (0) (3) (68) (5) (0) (5) (81)
Balance as at 31st March, 2017 0 5 345 1,970 58 1 90 2,469
Net Block
Balance as at 1st April, 2015 59 27 797 1,496 36 0 20 2,435
Balance as at 31st March, 2016 58 27 839 1,914 35 0 29 2,902
Balance as at 31st March, 2017 58 27 1,075 2,423 33 0 38 3,654

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96 Standalone

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
NOTES:
(a) Buildings include ` 0 crores (31st March, 2016: ` 0 crores and 1st April, 2015: ` 0 crores) being the value of shares in co-operative housing societies.
(b) The title deeds of Freehold Land aggregating ` 0 crores (31st March, 2016: ` 1 crores and 1st April, 2015: ` 1 crores), Leasehold Land, net block
aggregating ` 1 crores, (31st March, 2016: ` 1 crores and 1st April, 2015: ` 1 crores) are in the process of perfection of title.
(c) Additions in capital expenditure of ` 1 crores (2015-16: ` 1 crores) and ` 1 crores (2015-16: ` 1 crores) incurred at Companys inhouse R&D facilities
at Mumbai and Bengaluru respectively are eligible for weighted deduction under section 35(2AB) of the Income Tax Act, 1961.
(d) The Property, Plant and Equipment in 4A includes assets given on lease given in the below table:

Building Plant & Furniture & Office Total

equipment fixtures equipment
Gross Block as at 1st April, 2015 (Deemed cost) 0 57 0 0 57
Accumulated Dep. as at 1st April, 2015 - - - - -
Net Block as at 1st April, 2015 0 57 0 0 57
Gross Block as at 31st March, 2016 0 60 0 0 60
Accumulated Dep. as at 31st March, 2016 (0) (1) - (0) (1)
Net Block as at 31st March, 2016 0 59 0 0 59
Gross Block as at 31st March, 2017 0 53 0 (0) 53
Accumulated Dep. as at 31st March, 2017 (0) (4) (0) 0 (3)
Net Block as at 31st March, 2017 0 49 0 0 50
B Capital work-in-progress
Capital work in progress as at 31st March 2017 is ` 203 crores (31st March 2016: ` 386 crores and 1st April 2015: ` 479 crores)
For contractual commitment with respect to property, plant and equipment refer Note 25.B.(ii).

5 INTANGIBLE ASSETS
Refer Note 2.4 (b) for accounting policy on Intangible Assets

Other intangible assets

Goodwill Brands/ Knowhow and Computer Total
Trademarks Design Software
Gross Block
Balance as at 1st April, 2015 (Deemed Cost) - 4 - 18 22
Additions - - - 1 1
Disposals - - - - -
Balance as at 31st March, 2016 - 4 19 23
Additions 0 0
Disposals - - - (0) (0)
Acquisitions through business combination (Refer note 43) 0 311 59 - 370
Balance as at 31st March, 2017 0 315 59 19 393

Accumulated Amortisation and Impairment

Balance as at 1st April, 2015 - - - - -
Additions - 4 - 7 11
Disposals - - - (0) (0)
Balance as at 31st March, 2016 - 4 - 7 11

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 97

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

Other intangible assets

Goodwill Brands/ Knowhow and Computer Total
Trademarks Design Software
Balance as at 31st March, 2016 - 4 - 7 11
Additions - - 6 6 12
Disposals - - - (0) (0)
Balance as at 31st March, 2017 - 4 6 13 23
Net Block
Balance as at 1st April, 2015 - 4 - 18 22
Balance as at 31st March, 2016 - - - 12 12
Balance as at 31st March, 2017 0 311 53 6 370
The Company has elected to measure all its intangibles at the previous GAAP carrying amount i.e 31st March 2015 as its deemed cost (Gross Block Value)
on the date of transition to Ind AS i.e 1st April 2015. The movement in carrying value of intangible asset as per IGAAP is mentioned below:

Other intangible assets

Goodwill Brands/ Knowhow and Computer Total
Trademarks Design Software
Gross Block
Balance as at 1st April, 2015 (IGAAP) 12 160 - 141 301
Additions - - - 1 1
Disposals - - - (0) (0)
Balance as at 31st March, 2016 12 160 - 142 302
Additions - - - 0 0
Disposals - - - (0) (0)
Acquisitions through business combination (Refer note 43) 0 311 59 - 370
Balance as at 31st March, 2017 12 471 59 142 672

Accumulated Amortisation and Impairment

Balance as at 1st April, 2015 12 156 - 123 279
Additions - 4 - 7 11
Disposals - - - (0) (0)
Balance as at 31st March, 2016 12 160 130 290
Additions - - 6 6 12
Disposals - - - (0) (0)
Balance as at 31st March, 2017 12 160 6 136 302
Net Block
Balance as at 1st April, 2015 - 4 - 18 22

Balance as at 31st March, 2016 - - - 12 12

Balance as at 31st March, 2017 0 311 53 6 370

IMPAIRMENT CHARGES
The goodwill and indefinite life intangible assets are tested for impairment and accordingly no impairment charges were identified for FY 2016-17 (Nil
for FY2015-16)

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98 Standalone

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
SIGNIFICANT CASH GENERATING UNITS (CGUs)
The Company has identified its reportable segments, i.e. Home care, Personal Care, Foods, Refreshments and Others as the CGUs. The goodwill and
brand (with indefinite life) acquired through business combination has been entirely allocated to CGU Personal Care segment of the Company. The
carrying amount of goodwill and brand as at March 31, 2017 is ` 0 crores and ` 311 crores respectively.
Following key assumptions were considered while performing Impairment testing

Long term sustainable growth rates 7%

Weighted Average Cost of Capital % (WACC) befor tax (Discount rate) 13%
Average segmental margins 24%
The projections cover a period of five years, as we believe this to be the most appropriate timescale over which to review and consider annual performances
before applying a fixed terminal value multiple to the final year cash flows. The growth rates used to estimate future performance are based on the
conservative estimates from past performance. Segmental margins are based on FY 2016-17 performance.
Weighted Average Cost of Capital % (WACC) = Risk free return + ( Market risk premium x Beta variant for the Company).
We have performed sensitivity analysis around the base assumptions and have concluded that no reasonable changes in key assumptions would cause
the recoverable amount of the CGU to be less than the carrying value.

6 INVESTMENT IN SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE

Refer Note 2.4 (c) for accounting policy on Investment in Subsidiaries and Joint Venture

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
A. INVESTMENT IN SUBSIDIARIES
Unquoted
7,36,560 equity shares [31st March, 2016: 7,36,560 and 1st April, 5 5 5
2015: 7,36,560] of Nepalese ` 100 each held in Unilever Nepal
Limited
29,75,000 equity shares [31st March, 2016: 29,75,000 and 1st 73 73 73
April, 2015: 29,75,000] of ` 10 each held in Unilever India Exports
Limited
3,59,07,547 equity shares [31st March, 2016: 3,59,07,547 and 1st 172 172 172
April, 2015: 3,59,07,547] of ` 10 each held in Lakme Lever Private
Limited
1,79,10,132 equity shares [31st March, 2016: 1,79,10,132 and 1st - 3 3
April, 2015: 1,79,10,132] of ` 1 each held in Ponds Export Limited
[net of impairment in value of ` 2.58 crores (31st March, 2016: Nil
and 1st April, 2015: Nil)]
50,00,000 equity shares [31st March, 2016: 50,00,000 and 1st - 5 5
April, 2015: 50,00,000] of ` 10 each held in Jamnagar Properties
Private Limited[net of impairment in value of `5.00 crores (31st
March, 2016: Nil and 1st April, 2015: Nil)]
2,21,700 equity shares [31st March, 2016: 2,21,700 and 1st April, 4 4 4
2015: 2,21,700] of ` 10 each held in Daverashola Estates Private
Limited
50,000 equity shares [31st March, 2016: 50,000 and 1st April, 0 0 0
2015: 50,000] of ` 10 each held in Levindra Trust Limited
50,000 equity shares [31st March, 2016: 50,000 and 1st April, 0 0 0
2015: 50,000] of ` 10 each held in Hindlever Trust Limited
50,00 equity shares [31st March, 2016: 50,000 and 1st April, 2015: 0 0 0
50,000] of ` 10 each held in Levers Associated Trust Limited
7,600 equity shares [31st March, 2016: 7,600 and 1st April, 2015: 0 0 0
7,600] of ` 10 each held in Hindustan Unilever Foundation

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 99

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
10,000 equity shares [31st March, 2016: 10,000 and 1st April, 0 0 0
2015: 10,000] of ` 10 each held in Bhavishya Alliance Child
Nutrition Initiatives
Total (A) 254 262 262
B. INVESTMENT IN JOINT VENTURE
Unquoted
4,51,69,778 equity shares [31st March, 2016: 4,51,69,778 and
1st April, 2015: 4,23,46,667] of ` 10 each held in Kimberly Clark
Lever Private Limited [net of impairment in value of `50 crores - 51 36
(31st March, 2016: ` 50 crores and 1st April, 2015: ` 50 crores)]
[Classified as Asset held for Sale during the year, Note: 17]
Total (B) - 51 36
Total (A+B) 254 313 298
Aggregate amount of quoted investments - - -
Market value of quoted investments - - -
Aggregate amount of unquoted investments 254 313 298
Aggregate amount of impairment in value of investments 8 50 50
C. INVESTMENT IN ASSOCIATE
 he Company holds 24% of equity holdings in Comfund Consulting Limited and 26% equity and preference capital holding in Aquagel Chemicals
T
(Bhavnagar) Private Limited. The Company does not exercise significant influence or control on decisions of the investee. Hence, they are not being
construed as associate companies.

Annual Report 2016-17 Hindustan Unilever Limited

100 Standalone

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
INFORMATION ABOUT SUBSIDIARIES AND JOINT VENTURE

Proportion (%) of equity interest

Country of
Name of the Company Principal activities As at As at As at
incorporation
31st March, 2017 31st March, 2016 1st April, 2015
Subsidiaries
Unilever India Exports Limited India FMCG export business 100 100 100
Lakme Lever Private Limited India (i) Beauty salons 100 100 100
(ii) Job work business
Unilever Nepal Limited Nepal FMCG business 80 80 80
Ponds Export Limited India Leather products busi- 90 90 90
ness (primarily exports)
Jamnagar Properties Private Limited India Real estate Company 100 100 100
Daverashola Estates Private Limited India Real estate Company 100 100 100
Levindra Trust Limited India Discharge trust business 100 100 100
as a trustee
Hindlever Trust Limited India Discharge trust business 100 100 100
as a trustee
Levers Associated Trust Limited India Discharge trust business 100 100 100
as a trustee
Hindustan Unilever Foundation India Not-for-profit Company 76 76 76
in the field of community
development initiatives.
Bhavishya Alliance Child Nutrition Initia- India Not-for-profit Company 100 100 100
tives that works in the area of
social development is-
sues
Joint venture
Kimberly Clark Lever Private Limited India FMCG business (infant 50 50 50
care and feminine care
products)

7 INVESTMENTS
Refer Note 2.4 (g) for accounting policy on Investments.

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
NON-CURRENT INVESTMENTS
A. Equity instruments
Fair value through profit and loss
Quoted 0 0 0

Unquoted 1 1 1

Total (A) 1 1 1

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 101

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
B. Other instruments
Amortised cost

Unquoted

Investment in debentures and bonds 0 0 0

Investment in National Savings Certificates 0 0 0

Fair value through profit and loss

Unquoted

Investment in preference shares 5 5 5

Total (B) 5 5 5

Total (A+B) 6 6 6

CURRENT INVESTMENTS

C. Other instruments

Fair value through other comprehensive income

Quoted

Investments in treasury bills 1,459 1,265 1,328

Investments in government securities - - 471

Fair value through profit and loss

Unquoted

Investments in mutual funds 2,060 1,196 925

Total (C) 3,519 2,461 2,724

Total (A+B+C) 3,525 2,467 2,730

Aggregate amount of quoted investments 1,459 1,265 1,799

Market value of quoted investments 1,459 1,265 1,799

Aggregate amount of unquoted investments 2,066 1,202 931

Aggregate amount of impairment in value of investments - - -

Refer Note 39 for information about fair value measurement and Note 40 for credit risk and market risk of investments.

8 LOANS
(Unsecured, considered good unless otherwise stated)
Refer Note 2.4 (g) for accounting policy on Loans.

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015

NON-CURRENT
Loans to related parties (Refer Note 44) 198 162 180
Total 198 162 180

Refer Note 40 for information about credit risk and market risk for loans.

Annual Report 2016-17 Hindustan Unilever Limited

102 Standalone

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
9 OTHER FINANCIAL ASSETS
(Unsecured, considered good unless otherwise stated)
Refer Note 2.4 (g) for accounting policy on Financial Instruments.

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
NON-CURRENT
Investments in term deposits (with remaining maturity of more than 1 0 1
twelve months)
Security deposits 108 100 100
Other assets (includes other receivables etc.) 5 32 7
Total (A) 114 132 108
CURRENT
Current account balances with group companies and joint venture 70 81 84
Derivatives - foreign exchange forward contracts 0 3 2
Other assets (includes other receivables, etc.) 236 169 237
Total (B) 306 253 323
Total (A+B) 420 385 431
Refer Note 40 for information about credit risk and market risk for other financial assets

10 INCOME TAXES
Refer Note 2.4 (m) for accounting policy on Income Taxes.
A. COMPONENTS OF INCOME TAX EXPENSE

Year ended Year ended

31st March, 2017 31st March, 2016
I. Tax expense recognised in the Statement of Profit and Loss

Current tax

Current year 1,930 1,877

Adjustments/(credits) related to previous years - (net) (65) (61)

Total (A) 1,865 1,816

Deferred tax charge/(credit)

Origination and reversal of temporary differences 41 (7)

Total (B) 41 (7)

Total (A+B) 1,906 1,809

II. Tax on Other Comprehensive Income

Deferred tax

(Gain)/loss on remeasurement of net defined benefit plans (11) (5)

(Gain)/loss on debt instruments through other comprehensive income 0 (1)

(11) (6)

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 103

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
B. RECONCILIATION OF EFFECTIVE TAX RATE
The reconciliation between the statutory income tax rate applicable to the Company and the effective income tax rate of the Company is as follows :

Year ended Year ended

31st March, 2017 31st March, 2016

Statutory income tax rate 34.6% 34.6%

Differences due to:

Expenses not deductible for tax purposes 2.0% 1.9%

Income exempt from income tax -0.9% -0.9%

Income tax incentives -4.6% -4.7%

Others* -1.3% -0.5%

Effective tax rate 29.8% 30.4%

* Others include prior period adjustment tax refunds and tax on exceptional items

C. MOVEMENT IN DEFERRED TAX ASSETS AND LIABILITIES

Movement during the year ended 31st March, 2016 As at Credit/ Credit/(charge) On account As at
1st April, (charge) in the in Other of Business 31st March,
2015 Statement of Comprehensive Combination 2016
Profit and Loss Income
Deferred tax assets/(liabilities)

Provision for post retirement benefits and other employee benefits 153 - 5 - 158
Provision for doubtful debts and advances 29 (8) - - 21

Expenses allowable for tax purposes when paid 136 0 - - 136

Depreciation (271) (9) - - (280)

Fair value gain/(loss) on investments (41) (22) 1 - (62)

Other temporary differences 149 46 - - 195

155 7 6 - 168

Movements during the year ended 31st March, 2017 As at Credit/ Credit/(charge) On account As at
1st April, (charge) in the in Other of Business 31st March,
2016 Statement of Comprehensive Combination 2017
Profit and Loss Income
Deferred tax assets/(liabilities)

Provision for post retirement benefits and other employee benefits 158 (33) 11 - 136

Provision for doubtful debts and advances 21 (1) - - 20

Expenses allowable for tax purposes when paid 136 (13) - - 123

Depreciation (280) (71) - 22 (329)

Fair value gain/(loss) on investments (62) (21) - - (83)

Other temporary differences 195 98 (0) - 293

168 (41) 11 22 160

Annual Report 2016-17 Hindustan Unilever Limited

104 Standalone

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
D. TAX ASSETS AND LIABILITIES

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015

Non current tax assets (net) 311 246 252

Non current tax liabilities (net) 296 193 135

11 OTHER NON-CURRENT ASSETS

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Security Deposits with customs, port trust, excise and other 37 27 35
government authorities
Capital advances 33 14 9

Other advances (includes advances for materials) 30 35 47

Less: Allowance for bad and doubtful advances (30) (35) (47)

70 41 44

The movement in allowance for bad and doubtful advances is

as follows:
Balance as at beginning of the year 35 47 51

Allowance for bad and doubtful assets during the year 4 5 7

Written off during the year (9) (17) (11)

Balance as at the end of the year 30 35 47

12 INVENTORIES
Refer Note 2.4 (d) for accounting policy on inventories.

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Raw materials [includes in transit: ` 79 crores (31st March, 2016: ` 58 789 807 777
crores and 1st April, 2015: ` 25 crores)]
Packing materials 90 100 109

Work-in-progress 205 354 295

Finished goods [includes in transit: ` 18 crores (31st March, 2016: ` 29 crores 1,214 1,206 1,361
and 1st April, 2015: ` 30 crores)] (Refer note (a) below)
Stores and spares 64 61 61

2,362 2,528 2,603

(a) Finished goods includes goods purchased for re-sale, as both are stocked together.
(b) During FY 2016-17 an amount of ` 128 crores (31st March, 2016: ` 152 crores) was charged to the Statement of Profit and Loss on account of damage
and slow moving inventory. The reversal on account of above during the year amounted to Nil (31st March, 2016: Nil).

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 105

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
13 TRADE RECEIVABLES
(Unsecured unless otherwise stated)
Refer Note 2.4 (g) for accounting policy on Trade Receivables.

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Considered good 928 1,064 783
Considered doubtful 31 23 37
Less: Allowance for bad and doubtful debts (31) (23) (37)
928 1,064 783
The movement in allowance for bad and doubtful debts is as follows:
Balance as at beginning of the year 23 37 36
Allowance for bad and doubtful debts during the year 11 3 5
Trade receivables written off during the year (3) (17) (4)
Balance as at the end of the year 31 23 37
Refer note 40 for information about credit risk and market risk of trade receivables.

14 CASH AND CASH EQUIVALENTS

Refer Note 2.4 (e) for accounting policy on Cash and Cash Equivalents.

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Cash on hand 0 0 1
Balances with Banks
In current accounts 65 240 32
Term deposits with original maturity of less than three months 507 395 540
Short term, highly liquid investments
Treasury bills with original maturity of less than three months - - 147
572 635 720

15 BANK BALANCES OTHER THAN CASH AND CASH EQUIVALENTS

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Earmarked balances with banks
Unpaid dividend 114 104 92
Margin money deposits - - 2
Investments in term deposits (with original maturity of more than 985 2,020 1,724
three months but less than twelve months)
1,099 2,124 1,818

Annual Report 2016-17 Hindustan Unilever Limited

106 Standalone

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
16 OTHER CURRENT ASSETS
As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Export benefits receivable 3 1 11
VAT credit receivable 55 26 27
CENVAT receivable 243 228 165
Other advances (includes prepaid expenses etc.) 252 210 177
553 465 380

17 ASSETS HELD FOR SALE

Refer Note 2.4 (f) for accounting policy on Assets Held for Sale

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Groups of assets held for sale
Freehold Land 2 2 1
Buildings 18 19 4
Plant and equipment 1 1 4
Furniture and fixtures 0 0 0
Vehicles 0 0 -
Office equipment 0 0 0
Investment in Joint Venture 51 - -
72 22 9

18 EQUITY SHARE CAPITAL

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Authorised
2,25,00,00,000 (31st March, 2016: 2,25,00,00,000 and 1st April, 2015: 225 225 225
2,25,00,00,000) equity shares of ` 1 each
Issued, subscribed and fully paid up
2,16,43,49,639 (31st March, 2016: 2,16,39,36,971 and 1st April, 2015: 216 216 216
2,16,34,64,851) equity shares of `1 each
216 216 216

a) Reconciliation of the number of shares

Equity Shares: As at 31st March , 2017 As at 31st March, 2016 As at 1st April, 2015
Number of Amount Number of Amount Number of Amount
shares shares shares
Balance as at the beginning of the year 2,16,39,36,971 216 2,16,34,64,851 216 2,16,26,96,292 216

Add: ESOP shares issued during the year (Refer note 42) 4,12,668 0 4,72,120 0 7,68,559 0
Balance as at the end of the year 2,16,43,49,639 216 2,16,39,36,971 216 2,16,34,64,851 216

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 107

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
b) Rights, preferences and restrictions attached to shares
Equity shares: The Company has one class of equity shares having a par value of ` 1 per share. Each shareholder is eligible for one vote per share
held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential
amounts, in proportion to their shareholding. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the
ensuing Annual General Meeting, except in case of interim dividend.

c) Shares held by holding Company and subsidiaries of holding Company in aggregate

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Equity Shares of `1 each
1,11,43,70,148 shares (31st March, 2016: 1,11,43,70,148 and 1st April, 111 111 111
2015: 1,11,43,70,148) held by Unilever PLC, UK, the holding Company
34,00,42,710 shares (31st March, 2016: 34,00,42,710 and 1st April, 34 34 34
2015: 34,00,42,710) held by subsidiaries of the holding Company

d) Details of equity shares held by shareholders holding more than 5% of the aggregate shares in the Company

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015

Number of shares 1,11,43,70,148 1,11,43,70,148 1,11,43,70,148

Unilever PLC, UK, the holding Company 51.49% 51.50% 51.51%

e) Shares reserved for issue under options

As at 31st March, 2017 As at 31st March, 2016 As at 1st April, 2015

Number Amount Number Amount Number Amount
of shares of shares of shares
Under 2001 HLL Stock Option Plan: equity shares of `1 each, at an - 0 - 0 23,100 0
exercise price of `132.05 per share
Under 2006 HUL Performance Share Scheme: equity shares of `1 - 0 - 0 3,64,566 0
each, at an exercise price of ` 1 per share
Under 2012 HUL Performance Share Scheme: equity shares of ` 1 5,52,414 0 8,85,044 0 7,47,221 0
each, at an exercise price of ` 1 per share (refer note 42)
5,52,414 0 8,85,044 0 11,34,887 0
For terms and other details Refer note 42.

f) Aggregate number of shares bought back during 5 years immediately preceding 31st March, 2017

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015

No. of equity shares bought back by the Company - 2,28,83,204 2,28,83,204

Annual Report 2016-17 Hindustan Unilever Limited

108 Standalone

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
19 OTHER EQUITY
Refer Statement of Changes in Equity for detailed movement in Equity balance.

A. Summary of Other Equity balance.

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Capital Reserve 4 4 4
Capital Redemption Reserve 6 6 6
Securities Premium Reserve 116 98 81
Employee Stock Options Outstanding Account 30 43 41
General Reserve 2,187 2,187 2,187
Retained Earnings 3,953 3,727 3,599
Other Reserves 9 9 9
Items of Other Comprehensive Income
- Remeasurements of defined benefit plans (32) (11) -
- Fair value of Debt instruments through OCI 1 0 1
Total Other Equity 6,274 6,063 5,928

B. Nature and purpose of reserves

Capital Reserve: During amalgamation, the excess of net assets taken, over the cost of consideration paid is treated as capital reserve.
(a) 
Capital Redemption Reserve: The Company has recognised Capital Redemption Reserve on buyback of equity shares from its retained earnings.
(b) 
The amount in Capital Redemption Reserve is equal to nominal amount of the equity shares bought back.
(c) S
 ecurities Premium Reserve: The amount received in excess of face value of the equity shares is recognised in Securities Premium Reserve. In
case of equity-settled share based payment transactions, the difference between fair value on grant date and nominal value of share is accounted
as securities premium reserve.
Employee Stock Options Outstanding Account: The fair value of the equity-settled share based payment transactions with employees is recognised
(d) 
in Statement of Profit and Loss with corresponding credit to Employee Stock Options Outstanding Account.
General Reserve: The Company has transferred a portion of the net profit of the Company before declaring dividend to general reserve pursuant to
(e) 
the earlier provisions of Companies Act 1956. Mandatory transfer to general reserve is not required under the Companies Act 2013.
(f) Retained Earnings: Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or
other distributions paid to shareholders.
Other Reserves: The Company has recognised Other Reserves on amalgamation of Brooke Bond Lipton India Limited as per statutory requirements.
(g) 
This reserve is not available for capitalisation/declaration of dividend/ share buy-back. Further it also includes capital subsidy and revaluation
reserve.
(h) D
 ebt Instruments through Other Comprehensive Income: The fair value change of the debt instruments measured at fair value through other
comprehensive income is recognised in Debt instruments through Other Comprehensive Income. Upon derecognition, the cumulative fair value
changes on the said instruments are reclassified to the Statement of Profit and Loss.

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 109

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
C. Other Comprehensive Income accumulated in Other Equity, net of tax
The disaggregation of changes in other comprehensive income by each type of reserve in equity is shown below:

Remeasurements of Debt instruments Total

defined benefit plans through Other
Comphrehensive Income
As at 1st April, 2015 - 1 1

Remeasurement gain/(loss) on defined benefit plans (16) - (16)

Gain/(loss) on debt instruments recognised in other - (2) (2)
comprehensive income
Reclassified to Statement of Profit and Loss - - -
Income tax effect 5 1 6
As at 31st March 2016 (11) 0 (11)

Remeasurement gain/(loss) on defined benefit plans (32) - (32)

Gain/(loss) on debt instruments recognised in other - 1 1
comprehensive income
Reclassified to Statement of Profit and Loss - - -
Income tax effect 11 (0) 11
As at 31st March, 2017 (32) 1 (31)

D. Capital Management
Equity share capital and other equity are considered for the purpose of Companys capital management.
The Company manages its capital so as to safeguard its ability to continue as a going concern and to optimise returns to shareholders. The capital
structure of the Company is based on managements judgement of its strategic and day-to-day needs with a focus on total equity so as to maintain
investor, creditors and market confidence.
The management and the Board of Directors monitors the return on capital as well as the level of dividends to shareholders. The Company may take
appropriate steps iin order to maintain, or if necessary adjust, its capital structure.

20 OTHER FINANCIAL LIABILITIES

Refer Note 2.4 (g) for accounting policy on Financial Instruments.

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
NON-CURRENT
Security deposits 22 19 18
Contingent consideration 49 - -
Total (A) 71 19 18
CURRENT
Unpaid dividends 114 104 92
Derivative financial liabilities - forward contracts 13 10 38
Other payables (payable for purchase of property, plant and 54 123 78
equipment, employee liability, etc.)
Total (B) 181 237 208
Total (A+B) 252 256 226

a) There are no amounts due for payment to the Investor Education and Protection Fund under Section 125 of the Companies Act, 2013 as 31st
March,2017 (31st March 2016: Nil, 1st April 2015: Nil).

Annual Report 2016-17 Hindustan Unilever Limited

110 Standalone

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
21 PROVISIONS
Refer Note 2.4 (h) for accounting policy on Provisions.

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
NON-CURRENT
Provision for employee benefits (pension, medical, compensated 105 202 176
absences and others)[Refer Note 41]
Other provisions (including for statutory levies etc.) - net [Refer (a) 380 392 306
below]
Total (A) 485 594 482
CURRENT
Provision for employee benefits (gratuity, pension, medical, compen- 41 29 44
sated absences and others)[Refer Note 41]
Other provisions (including restructuring etc.) [Refer (a) below] 346 261 185
Total (B) 387 290 229
Total (A+B) 872 884 711

a) Movement in Other provisions (Non-current and Current)

Indirect Tax related Legal and Other Total
Matters
Balance as at 1st April, 2015 248 243 491
Add: Provision/reclassified during the year * 63 204 267
Less: Amount utilised/reversed during the year (71) (34) (105)
Balance as at 31st March, 2016 240 413 653
Add: Provision/reclassified during the year * 132 69 201
Less: Amount utilised/reversed during the year (92) (36) (128)
Balance as at 31st March, 2017 280 446 726

* includes unwinding of discount and effect of change in discount rate.

The provisions for indirect taxes and legal matters comprises of numerous separate cases that arise in the ordinary course of business. These provisions
have not been discounted as it is not practicable for the Company to estimate the timing of the provision utilisation and cash outflows, if any, pending
resolution.

22 OTHER NON-CURRENT LIABILITIES

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Employee and ex-employee related liabilities 207 183 133
207 183 133

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 111

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
23 TRADE PAYABLES
Refer Note 2.4 (g) for accounting policy on Trade Payables.

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
DUES TO MICRO AND SMALL ENTERPRISES (as per the intimation
received from vendors)
a. Principal and interest amount remaining unpaid 0 - -
b. Interest due thereon remaining unpaid - - -
c. Interest paid by the Company in terms of Sections 16 of the Micro, - - -
Small and Medium Enterprises Development Act, 2006, along with the
amount of the payment made to the supplier beyond the appointed day
d. Interest due and payable for the period of delay in making - - -
payment (which have been paid but beyond the appointed day
during the period) but without addming interest specified under
the Micro, Small and Medium Enterprise Act, 2006
e. Interest accrued and remaining unpaid - - -
f. Interest remaining due and payable even in succeeding years, until - - -
such date when the interest dues as above are actually paid to the
small enterprises

DUES TO OTHERS
Acceptances 242 340 437
Trade payables 5,764 5,158 4,815
6,006 5,498 5,252
Refer note 40 for information about liquidity risk and market risk related to trade payables.

24 OTHER CURRENT LIABILITIES

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Salaries, wages, bonus and other employee payable 192 186 274
Statutory dues (including provident fund, tax deducted at source and 366 401 404
others)
Advance from customers 70 40 44
Other payables - - 16
628 627 738

25 CONTINGENT LIABILITIES AND COMMITMENTS

Refer Note 2.4 (h) for accounting policy on Contingent Liabilities.

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
A. CONTINGENT LIABILITIES
Claims against the Company not acknowledged as debts
Income tax matters 581 641 559
Sales tax matters 122 60 61
Excise duty, service tax and customs duty matters 193 236 203
Other matters including claims related to employees 83 81 78
/ex-employees, property related demands, etc.

Annual Report 2016-17 Hindustan Unilever Limited

112 Standalone

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
(i) It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the
respective proceedings as it is determinable only on receipt of judgements/decisions pending with various forums/authorities.
(ii) The Company does not expect any reimbursements in respect of the above contingent liabilities.
(iii) The Companys pending litigations comprise of claims against the Company by employees and pertaining to proceedings pending with
Income Tax, Excise, Custom, Sales/VAT tax and other authorities. The Company has reviewed all its pending litigations and proceedings
and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial
statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial results.
(iv) The Company has given Bank Guarantees in respect of certain contingent liabilities included above.

Corporate Guarantee given 8 8 8

B. COMMITMENTS
i) Operating lease commitments
 he Companys significant leasing arrangements are in respect of operating leases for premises (residential, office, stores, godown etc.) and comput-
T
ers. These leasing arrangements which are cancellable (other than those specified below), range between 11 months and 10 years generally, or longer,
and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as rent in the Statement
of Profit and Loss.
 he Company has entered into agreement to take certain land and building on operating lease for warehousing activities from a third party. The lease
T
arrangement is for 10 years, including a non-cancellable term of 9 years. The lease rent of ` 14 crores (2015-16: ` 13 crores) on such lease is included
in Rent.
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

Year ended Year ended

31st March, 2017 31st March, 2016
Not later than one year 12 12
Later than one year and not later than five years 56 53
Later than five years 24 38

Year ended Year ended Year ended

31st March, 2017 31st March, 2016 1st April, 2015
ii) Capital commitments
Estimated value of contracts in capital account remaining to be 254 140 163
executed and not provided for (net of capital advances)
254 140 163
iii) Other commitments
 uring the year, the Company has issued letters of undertakings to the bankers of its below mentioned fully owned subsidaries to provide need based
D
financial support :
i) Lakme Lever Private Limited
ii) Daverashola Estates Private Limited
iii) Jamnagar Properties Private Limited

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 113

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
26 REVENUE FROM OPERATIONS
Refer Note 2.4 (i) for accounting policy on Revenue Recognition.

Year ended Year ended

31st March, 2017 31st March, 2016
Sale of products (including excise duty) 33,895 32,929
Other operating revenue
Income from services rendered 513 490
Others (including scrap sales, commission, etc.) 79 72
34,487 33,491

27 OTHER INCOME
Refer Note 2.4 (i) for accounting policy on Revenue Recognition.

Year ended Year ended

31st March, 2017 31st March, 2016
Interest income on
Bank deposits 173 205
Current investments 74 108
Others 15 18
Dividend income from
Subsidiaries 167 136
Current-investments 11 30
Non-current investments - 1
Fair value gain/(loss)
Investments measured at fair value through profit or loss 86 69
Investments measured at fair value through other comprehensive income 0 (3)
Net gain on sale of investments 0 0
526 564

28 COST OF MATERIALS CONSUMED

Year ended Year ended
31st March, 2017 31st March, 2016
Raw materials consumed 8,999 8,896
Packing materials consumed 2,364 2,371
11,363 11,267

29 PURCHASES OF STOCK-IN-TRADE
Year ended Year ended
31st March, 2017 31st March, 2016
Purchases of stock-in-trade 4,166 3,951
4,166 3,951

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114 Standalone

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
30 CHANGES IN INVENTORIES OF FINISHED GOODS (INCLUDING STOCK-IN-TRADE) AND WORK-IN-PROGRESS
Year ended Year ended
31st March, 2017 31st March, 2016
Opening inventories
Finished goods 1,206 1,361
Work-in-progress 355 295
Closing inventories
Finished goods (1,214) (1,206)
Work-in-progress (205) (355)
Excise duty on increase/(decrease) of finished goods 14 (8)
156 87

31 EXCISE DUTY
Year ended Year ended
31st March, 2017 31st March, 2016
Excise duty 2,597 2,430
2,597 2,430

32 EMPLOYEE BENEFITS EXPENSES

Refer Note 2.4 (k) for accounting policy on Employee Benefits.

Year ended Year ended

31st March, 2017 31st March, 2016
Salaries and wages, bonus etc. 1,330 1,245
Contribution to provident funds and other funds 81 77
Defined benefit plan expense (Refer Note 41) 18 19
Share based payments to employees (Refer note 42) 94 127
Workmen and staff welfare expenses 97 105
1,620 1,573

33 FINANCE COSTS
Year ended Year ended
31st March, 2017 31st March, 2016
Interest expense on bank overdraft and others 0 0
Net interest on the net defined benefit liability (Refer Note 41) 6 14
Unwinding of discount on provisions and liabilities 9 -
Unwinding of discount on employee and ex-employee related liabilities 7 1
22 15

34 DEPRECIATION AND AMORTISATION EXPENSES

Refer Note 2.4 (a) and (b) for accounting policy on Property, Plant and Equipment and Intangibles.

Year ended Year ended

31st March, 2017 31st March, 2016
Depreciation on property, plant and equipment 384 310
Amortisation on intangible assets 12 11
396 321

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 115

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
35 OTHER EXPENSES
Year ended Year ended
31st March, 2017 31st March, 2016
Advertising and promotion 3,470 3,600
Carriage and freight 1,457 1,474
Royalty
- Technology 511 489
- Brand 169 131
- Service 364 1,044 267 887
Processing charges 290 332
Power, fuel, light and water 257 271
Rent 241 233
Travelling and motor car expenses 176 177
Repairs 117 119
Rates & taxes (excluding income tax) 116 125
Corporate social responsibility expense [Refer note (c) below] 104 92
Miscellaneous expenses [Refer note (a) below] 1,266 1,124
8,538 8,434

Year ended Year ended

31st March, 2017 31st March, 2016
(a) Miscellaneous expenses include:
Auditors remuneration and expenses
Statutory audit fees 2 2
Tax audit fees 1 1
Non audit fees - -
Others
Fees for other audit related services 1 1
Fees for certification 0 0
Reimbursement of out-of-pocket expenses 0 0
Total 4 4
(b) Total revenue expenditure (net of recoveries) on Research and Development (R&D) eligible for weighted deduction under section 35(2AB) of the
Income Tax Act, 1961 aggregates to ` 28 crores (2015-16: ` 37 crores). The details are as below:

Year ended Year ended

31st March, 2017 31st March, 2016
Location of the R&D facility Bengaluru Mumbai Bengaluru Mumbai
Revenue expenditure eligible u/s 35(2AB)
Salaries & wages 9 11 10 14
Materials, consumables and spares 1 2 1 5
Utilities - 0 - 0
Other expenditure directly related to R&D 2 3 3 4
12 16 14 23

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116 Standalone

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
(c) The Company has spent ` 104 crores (2015-16: ` 92 crores) towards various schemes of Corporate Social Responsibility as prescribed under
section 135 of the Companies Act, 2013. The details are:
I. Gross amount required to be spent by the Company during the year: ` 102 crores (2015-16: ` 92 crores)

II. Amount spent during the year on:

Year ended Year ended

31st March, 2017 31st March, 2016
In cash /payable Yet to be paid in In cash /payable Yet to be paid in
Cash Cash
i) Construction/Acquisition of any asset - - - -
ii) For purposes other than (i) above 104 - 92 -
104 - 92 -

III. Above includes a contribution of ` 18 crores (2015-16: ` 8 crores) to subsidiary Hindustan Unilever Foundation which is a Section 8 registered
Company under Companies Act, 2013, with the main objectives of working in the areas of social, economic and environmental issues such as
water harvesting, health and hygiene awareness, women empowerment and enable the less privileged segments of the society to improve their
livelihood by enhancing their means and capabilities to meet the emerging opportunities.
IV. The Company does not carry any provisions for Corporate social responsibility expenses for current year and previous year.

36 EXCEPTIONAL ITEMS
Year ended Year ended
31st March, 2017 31st March, 2016

i) Profit on disposal of surplus properties 164 60

ii) Profit on disposal of business/subsidiary 19 50
iii) Decrease in liability on account of plans amendments basis actuarial valuation 115 -
Total exceptional income (A) 298 110
i) Restructuring costs
a) Other costs (57) (141)
Total exceptional expenditure (B) (57) (141)
Exceptional items (net) (A+B) 241 (31)

37 EARNINGS PER EQUITY SHARE

Refer Note 2.4 (p) for accounting policy on Earnings Per Share.

Year ended Year ended

31st March, 2017 31st March, 2016

Earnings Per Share has been computed as under:

Profit for the year 4,490 4,137
Weighted average number of equity shares outstanding 2,16,42,12,891 2,16,37,96,723
Earnings Per Share (`) - Basic (Face value of ` 1 per share) ` 20.75 ` 19.12

Add: Weighted average number of potential equity shares on account of employee stock options/ 4,25,681 7,21,610
performance share schemes

Weighted average number of Equity shares (including dilutive shares) outstanding 2,16,46,38,572 2,16,45,18,333
Earnings Per Share (`) - Diluted (Face value of ` 1 per share) ` 20.74 ` 19.11

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 Overview Reports Financial Statements 117

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
38 DIVIDEND ON EQUITY SHARE
Year ended Year ended
31st March, 2017 31st March, 2016
Dividend on equity shares declared and paid during the year
Final dividend of ` 9.50 per share for FY 2015-16 (2014-15: ` 9.00 per share) 2,056 1,947
Dividend distribution tax on final dividend* 419 396
Interim dividend of ` 7.00 per share for FY 2016-17 (2015-16: ` 6.50 per share) 1,515 1,407
Dividend distribution tax on interim dividend* 274 259
4,264 4,009
Proposed dividend on equity shares not recognised as liability
Final dividend of ` 10.00 per share for FY 2016-17 (2015-16: ` 9.50 per share) 2,164 2,056
Dividend distribution tax on final dividend 441 419
2,605 2,475
Payout ratio for FY 2016-17 98%
Proposed dividend on equity shares is subject to the approval of the shareholders of the Company at the Annual General Meeting and not recognised as
liability as at the Balance Sheet date.
*Dividend Distribution Tax (DDT)-net, pertaining to the current year comprises the DDT on interim and proposed final dividend and the credit in respect of tax paid under
section 115 O of the Indian Income-tax Act, 1961 by the Company on dividend received from its domestic and foreign subsidiaries during the year.

39 FINANCIAL INSTRUMENTS
Refer Note 2.4 (g) for accounting policy on Financial Instruments.
A. ACCOUNTING CLASSIFICATIONS AND FAIR VALUES
The carrying amounts and fair values of financial instruments by class are as follows:

Carrying value /Fair value

As at As at As at
Note 31st March , 2017 31st March, 2016 1st April, 2015
FINANCIAL ASSETS
Financial assets measured at fair value
Investments measured at
i. Fair value through other comprehensive income 7 1,459 1,265 1,799
ii. Fair value through profit and loss 7 2,066 1,202 931
Derivatives - foreign exchange forward contracts 9 0 3 2
Financial assets measured at amortised cost
Investments 7 0 0 0
Loans 8 198 162 180
Investments in term deposits 9,15 986 2,020 1,725
Security deposits 9 108 100 100
Other assets 9 241 201 244
5,058 4,953 4,981
FINANCIAL LIABILITIES
Financial liabilities measured at fair value
Derivatives - foreign exchange forward contracts 20 13 10 38
Contingent consideration 20 49 - -
Financial liabilities measured at amortised cost
Security deposits 20 22 19 18
Other payables 20 54 123 78
138 152 134
The Company has disclosed financial instruments such as cash and cash equivalents, other bank balances, trade receivables, current account balances
with group companies and joint venture, trade payables and unpaid dividends at carrying value because their carrying amounts are a reasonable
approximation of the fair values due to their short term nature.

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118 Standalone

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
B. INCOME, EXPENSES, GAINS OR LOSSES ON FINANCIAL INSTRUMENTS
Interest income and expenses, gains or losses recognised on financial assets and liabilities in the Statement of Profit and Loss are as follows:

Year ended Year ended

31st March, 2017 31st March, 2016
Financial assets measured at amortised cost
Interest income 188 223
Allowance for doubtful debts 4 (7)
Financial assets measured at fair value through other comprehensive income
Investment in debt instruments
Interest income 74 108
Fair value gain/(loss) recognised in other comprehensive income 2 (4)
Reclassified from other comprehensive income to Statement of Profit and 0 (3)
Loss
Financial assets measured at fair value through profit or loss
Fair value gain/(loss) on investment in equity instruments - -
Fair value gain/(loss) on investment in debt instruments 86 69
Financial liabilities measured at amortised cost
Interest expense 0 0
Derivatives - foreign exchange forward contracts
Fair value gain/(loss) (6) (7)

C. FAIR VALUE HIERARCHY

The fair value of financial instruments as referred to in note (A) above have been classified into three categories depending on the inputs used in the
valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurements)
and lowest priority to unobservable inputs (Level 3 measurements).
The categories used are as follows:
Level 1: Quoted prices for identical instruments in an active market;
Level 2: Directly or indirectly observable market inputs, other than Level 1 inputs; and
Level 3: Inputs which are not based on observable market data.
For assets and liabilities which are measured at fair value as at Balance Sheet date, the classification of fair value calculations by category is summarized
below:

Level 1 Level 2 Level 3 Total

As at 31st March, 2017
Assets at fair value
Investments measured at:
i. Fair Value through OCI 1,459 - - 1,459
ii. Fair Value through Profit or Loss 0 2,060 6 2,066
Derivatives - foreign exchange forward contracts - 0 - 0
Liabilities at fair value
Derivatives - foreign exchange forward contracts - 13 - 13
Contingent consideration - - 49 49

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 Overview Reports Financial Statements 119

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

Level 1 Level 2 Level 3 Total

As at 31st March, 2016
Assets at fair value
Investments measured at:
i. Fair Value through OCI 1,265 - - 1,265
ii. Fair Value through Profit or Loss 0 1,196 6 1,202
Derivatives - foreign exchange forward contracts - 3 - 3
Liabilities at fair value
Derivatives - foreign exchange forward contracts - 10 - 10
Contingent consideration - - - -
As at 1st April, 2015
Assets at fair value
Investments measured at:
i. Fair Value through OCI 1,799 - - 1,799
ii. Fair Value through Profit or Loss 0 925 6 931
Derivatives - foreign exchange forward contracts - 2 - 2
Liabilities at fair value
Derivatives - foreign exchange forward contracts - 38 - 38
There were no significant changes in the classification and no significant movements between the fair value hierarchy classifications of assets and
liabilities during FY 2016-17.

CALCULATION OF FAIR VALUES

The fair values of the financial assets and liabilities are defined as the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. Methods and assumptions used to estimate the fair values are consistent
with those used for the year ended 31st March, 2016.

Financial assets and liabilities measured at fair value as at Balance Sheet date:
1. The fair values of investment in treasury bills, government securities and quoted investment in equity shares is based on the current bid price of
respective investment as at the Balance Sheet date.
2. The fair values of investments in mutual fund units is based on the net asset value (NAV) as stated by the issuers of these mutual fund units in
the published statements as at Balance Sheet date. NAV represents the price at which the issuer will issue further units of mutual fund and the
price at which issuers will redeem such units from the investors.
3. The fair values of the derivative financial instruments has been determined using valuation techniques with market observable inputs. The
models incorporate various inputs including the credit quality of counter-parties and foreign exchange forward rates.
Other financial assets and liabilities
- Cash and cash equivalents (except for investments in mutual funds), trade receivables, investments in term deposits, other financial assets
(except derivative financial instruments), trade payables, and other financial liabilities (except derivative financial instruments) have fair values
that approximate to their carrying amounts due to their short-term nature.
- Loans have fair values that approximate to their carrying amounts as it is based on the net present value of the anticipated future cash flows
using rates currently available for debt on similar terms, credit risk and remaining maturities.

SIGNIFICANT UNOBSERVABLE INPUTS USED IN LEVEL 3 FAIR VALUES

As at 31st March, 2017 Significant unobservable inputs Sensitivity of input to fair value measurement
Contingent consideration Forecast revenue: 10% increase in forecasted revenue will have
additional liability of ` 5 crores and 10% decrease
will have an equal but opposite effect.
Discount rate: 12% 1% increase in Discount rate will have P&L gain
of ` 2 crores 1% decrease will have an equal but
opposite effect.

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120 Standalone

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
40 FINANCIAL RISK MANAGEMENT
The Companys business activities are exposed to a variety of financial risks, namely liquidity risk, market risks and credit risk. The Companys senior
management has the overall responsibility for establishing and governing the Companys risk management framework. The Company has constituted
a Risk Management Committee, which is responsible for developing and monitoring the Companys risk management policies. The Companys risk
management policies are established to identify and analyse the risks faced by the Company, to set and monitor appropriate risk limits and controls,
periodically review the changes in market conditions and reflect the changes in the policy accordingly. The key risks and mitigating actions are also
placed before the Audit Committee of the Company.
A. MANAGEMENT OF LIQUIDITY RISK
Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Companys approach in managing
liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management
considers both normal and stressed conditions.
The Company maintained a cautious liquidity strategy, with a positive cash balance throughout the year ended 31st March, 2017 and 31st March, 2016.
Cash flow from operating activities provides the funds to service the financial liabilities on a day-to-day basis.
The Company regularly monitors the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short term
surplus cash generated, over and above the amount required for working capital management and other operational requirements, is retained as cash
and cash equivalents (to the extent required) and any excess is invested in interest bearing term deposits and other highly marketable debt investments
with appropriate maturities to optimise the cash returns on investments while ensuring sufficient liquidity to meet its liabilities.
The following table shows the maturity analysis of the Companys financial liabilities based on contractually agreed undiscounted cash flows along with
its carrying value as at the Balance Sheet date.

Undiscounted Amount
Carrying amount Payable within 1 year More than 1 years Total
As at 31st March, 2017
Non-derivative liabilities
Trade payables (including acceptances) 6,006 6,006 - 6,006
Security deposits 22 - 22 22
Unpaid dividend 114 114 - 114
Other Payables 54 54 - 54
Contingent consideration 49 - 73 73
Derivative liabilities
Forward exchange contracts 13 13 - 13
As at 31st March, 2016
Non-derivative liabilities
Trade payables (including acceptances) 5,498 5,498 - 5,498
Security deposits 19 - 19 19
Unpaid dividend 104 104 - 104
Other Payables 123 123 - 123
Derivative liabilities
Foreign exchange forward contracts 10 10 - 10
As at 1st April, 2015
Non-derivative liabilities
Trade payables (including acceptances) 5,252 5,252 - 5,252
Security deposits 18 - 18 18
Unpaid dividend 92 92 - 92
Other Payables 77 77 - 77
Derivative liabilities
Foreign exchange forward contracts 38 38 - 38

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 Overview Reports Financial Statements 121

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
B.
MANAGEMENT OF MARKET RISK
The Companys size and operations result in it being exposed to the following market risks that arise from its use of financial instruments:
currency risk;
price risk; and
interest rate risk
The above risks may affect the Companys income and expenses, or the value of its financial instruments. The Companys exposure to and management
of these risks are explained below.

POTENTIAL IMPACT OF RISK MANAGEMENT POLICY SENSITIVITY TO RISK

1. CURRENCY RISK
The Company is subject to the risk that changes The Company is exposed to foreign exchange A 5% strengthening of the INR against key
in foreign currency values impact the Companys risk arising from various currency exposures, currencies to which the Company is exposed
exports revenue and imports of raw material and primarily with respect to US Dollar and Euro. (net of hedge) would have led to approximately
property, plant and equipment. The Company manages currency exposures an additional ` 0 crores gain in the Statement of
As at 31st March, 2017, the net unhedged within prescribed limits, through use of Profit and Loss (2015-16: ` 0 crores gain). A 5%
exposure to the Company on holding financial forward exchange contracts. Foreign exchange weakening of the INR against these currencies
assets (trade receivables and capital advances) transactions are covered with strict limits would have led to an equal but opposite effect.
and liabilities (trade payables and capital placed on the amount of uncovered exposure, if
creditors) other than in their functional currency any, at any point in time.
amounted to ` 2 crores payable (31st March, The aim of the Companys approach to
2016: ` 3 crores and 1st April, 2015: ` 4 crores). management of currency risk is to leave the
Company with no material residual risk.

2. PRICE RISK
The Company is mainly exposed to the price risk due The Company has laid policies and guidelines A 1% increase in prices would have led to
to its investment in debt mutual funds. The price risk which it adheres to in order to minimise price risk approximately an additional ` 21 crores gain in
arises due to uncertainties about the future market arising from investments in debt mutual funds. the Statement of Profit and Loss (2015-16: ` 12
values of these investments. crores gain). A 1% decrease in prices would have
At 31st March 2017, the investments in debt mutual led to an equal but opposite effect.
funds amounts to ` 2,060 crores (31st March, 2016:
` 1,196 crores and 1st April, 2015: ` 925 crores).
These are exposed to price risk.

3. INTEREST RATE RISK

The Company is mainly exposed to the interest The Company has laid policies and guidelines A 0.25% decrease in interest rates would have led
rate risk due to its investment in treasury bills including tenure of investment made to to approximately an additional ` 1 crore gain in the
and government securities. The interest rate minimise impact of interest rate risk. Statement of Profit and Loss (2015-16: ` 1 crore
risk arises due to uncertainties about the future gain). A 0.25% decrease in interest rates would have
market interest rate on these investments. led to an equal but opposite effect.
In addition to treasury bills and government
securities, the Company invests in term deposits
for a period of less than one year. Considering the
short-term nature, there is no significant interest
rate risk pertaining to these deposits.
As at 31st March 2017, the investments in
treasury bill and government securities
amounts to ` 1,459 (31st March, 2016: ` 1,265
crores and 1st April, 2015: ` 1,946 crores). These
are exposed to interest rate risk.

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122 Standalone

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
C. MANAGEMENT OF CREDIT RISK
Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations.
Trade receivables
Concentration of credit risk with respect to trade receivables are limited, due to the Companys customer base being large and diverse. All trade
receivables are reviewed and assessed for default on a quarterly basis.
Our historical experience of collecting receivables is that credit risk is low. Hence, trade receivables are considered to be a single class of financial assets.
Refer note 2.4(g) for accounting policy on Financial Instruments.
Other financial assets
The Company maintains exposure in cash and cash equivalents, term deposits with banks, investments in treasury bills, government securities, money
market liquid mutual funds and derivative instrument with financial institutions. The Company has set counter-parties limits based on multiple factors
including financial position, credit rating, etc. The Company has given inter-corporate deposits (ICD) only to its subsidiaries amounting ` 198 crores (31st
March, 2016: ` 162 crores and 1st April, 2015: ` 180 crores).
The Companys maximum exposure to credit risk as at 31st March, 2017, 2016 and 1st April, 2015 is the carrying value of each class of financial assets.

41 DEFINED BENEFIT PLANS

Refer note 2.4(k) for accounting policy on Employee Benefits.
Description of Plans
Retirement Benefit Plans of the Company include Gratuity, Management Pension, Officers Pension and Provident Fund. Other Post-Employment Benefit
Plans includes Post-Retirement Medical Benefits.
Gratuity is funded through investments mostly with an insurance service provider and partly through direct investment under Hind Lever Gratuity Fund.
Pension (Management Pension and Officers Pension) for most employees is managed through a trust, investments with an insurance service provider
and for some employees investments are managed through Company managed trust. Provident Fund for most of the employees are managed through
trust investments and for some employees through government administered fund. Post-retirement medical benefits are managed through investment
made under Company managed trust.
Governance
The trustees of the trust fund are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and
rules in the best interests of the plan participants. They are tasked with periodic reviews of the solvency of the fund and play a role in the long-term
investment, risk management and funding strategy.
Investment Strategy
The Companys investment strategy in respect of its funded plans is implemented within the framework of the applicable statutory requirements. The
plans expose the Company to a number of actuarial risks such as investment risk, interest rate risk, longevity risk and inflation risk. The Company
has developed policy guidelines for the allocation of assets to different classes with the objective of controlling risk and maintaining the right balance
between risk and long-term returns in order to limit the cost to the Company of the benefits provided. To achieve this, investments are well diversified,
such that the failure of any single investment would not have a material impact on the overall level of assets.
During the year the Company has amended its discreationary increase clause with respect to post retirement benefit plan, which has resulted into `115
crores credit to the Statement of Profit and Loss.

A. Balance Sheet
The assets, liabilities and surplus/(deficit) position of the defined benefit plans at the Balance Sheet date were:

Retirement Benefit Plans Other Post-Employment Benefit Plans

As at As at As at As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015 31st March, 2017 31st March, 2016 1st April, 2015
Present value of obligation 2,424 2,318 2,129 162 146 137
Fair value of plan assets (2,377) (2,170) (1,976) (93) (92) (96)
(Asset)/Liability recognised in the 47 148 153 69 54 41
Balance Sheet

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 Overview Reports Financial Statements 123

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

Retirement Benefit Plans Other Post-Employment Benefit Plans

As at As at As at As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015 31st March, 2017 31st March, 2016 1st April, 2015
Of which in respect of:
Funded plans in surplus:
Present value of obligation 12 10 12 - - -
Fair value of plan assets (42) (47) (50) - - -
(Asset)/Liability recognised in the -* -* -* - - -
Balance Sheet*
*The excess of assets over liabilities in
respect of Officers Pension have not
been recognised as they are lying in
an Income Tax approved irrevocable
trust fund.
Funded plans in deficit:
Present value of obligation 2,412 2,308 2,117 162 146 137
Fair value of plan assets (2,365) (2,160) (1,964) (93) (92) (96)
(Asset)/Liability recognised in the 47 148 153 69 54 41
Balance Sheet

B. Movements in Present Value of Obligation and Fair Value of Plan Assets

Retirement Benefit Plans Other Post-Employment Benefit Plans

Plan Assets Plan Obligation Total Plan Assets Plan Obligation Total
As at 1st April, 2015 2,014 2,129 115 96 137 41
Current service cost - 75 75 - 0 0
Past service cost - - - - - -
Interest cost - 167 167 - 11 11
Interest income 178 - (178) 7 - (7)
Actuarial (gain)/loss arising from changes in - - - - - -
demographic assumptions
Actuarial (gain)/loss arising from changes in (11) 7 18 (3) 2 5
financial assumptions
Actuarial (gain)/loss arising from experience - 5 5 - 5 5
adjustments
Employer contributions 91 - (91) - - -
Employee contributions 131 131 - - - -
Assets acquired/ (settled)* (26) (26) - - - -
Benefit payments (169) (169) - (8) (8) -
As at 31st March, 2016 2,208 2,318 111 92 146 54

As at 31st March, 2016 2,208 2,318 111 92 146 54

Current service cost - 73 73 - 0 0
Past service cost - (115) (115) - - -
Interest cost - 170 170 - 11 11
Interest income 171 - (171) 7 - (7)
Actuarial (gain)/loss arising from changes in - - - - - -
demographic assumptions
Actuarial (gain)/loss arising from changes in 27 30 3 3 14 11
financial assumptions

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124 Standalone

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

Retirement Benefit Plans Other Post-Employment Benefit Plans

Plan Assets Plan Obligation Total Plan Assets Plan Obligation Total
Actuarial (gain)/loss arising from experience - 22 22 - (1) (1)
adjustments
Employer contributions 76 - (76) - - -
Employee contributions 129 129 - - - -
Assets acquired/ (settled)* (42) (42) 0 - - -
Benefit payments (162) (162) - (9) (9) -
As at 31st March, 2017 2,407 2,424 17 93 162 69
* On account of Business Combination

C. Statement of Profit and Loss

The charge to the Statement of Profit and Loss comprises:

Retirement Benefit Plans Other Post-Employment Benefit Plans

Year ended Year ended Year ended Year ended
31st March, 2017 31st March, 2016 31st March, 2017 31st March, 2016
Employee Benefit Expenses *:
Current service cost 18 19 0 0
Past service cost (115) - - -
Finance costs * :
Interest cost 44 53 11 11
Interest income (42) (43) (7) (7)
Net impact on profit (before tax) (95) 29 4 4
Remeasurement of the net defined benefit
plans:
Actuarial gains/(losses) arising from - - - -
changes in demographic assumptions
Actuarial gains/(losses) arising from 20 15 11 5
changes in financial assumptions
Actuarial gains/(losses) arising from 0 (9) (1) 5
experience adjustments
Net impact on other comprehensive income 20 6 10 10
(before tax)
* Service cost and Finance cost has not been recognised in P&L for Officers Pension and Provident Fund
D. Assets
The fair value of plan assets at the Balance Sheet date for the defined benefit plans for each category are as follows:

Retirement Benefit Plans Other Post-Employment Benefit Plans

As at As at As at As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015 31st March, 2017 31st March, 2016 1st April, 2015
Quoted
Government debt instruments 809 700 637 - - -
Other debt instruments 1,000 914 814 93 92 96
Total (A) 1,809 1,614 1,451 93 92 96

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 125

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

Retirement Benefit Plans Other Post-Employment Benefit Plans

As at As at As at As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015 31st March, 2017 31st March, 2016 1st April, 2015
Unquoted
Other debt instruments 201 227 238 - - -
Others 397 367 325 - - -
Total (B) 598 594 563 - - -
Total (A+B) 2,407 2,208 2,014 93 92 96
 ote: Assets to the extent of ` 42 crores is not recognised in Balance Sheet of Officers Pension Fund as they are lying in an Income Tax approved
N
irrevocable trust fund
None of the plans invest directly in any property occupied by the Company or any financial securities issued by the Company.

E. Assumptions
With the objective of presenting the plan assets and plan obligations of the defined benefits plans at their fair value on the Balance Sheet, assumptions
under Ind AS 19 are set by reference to market conditions at the valuation date.

Retirement Benefit Plans Other Post-Employment Benefit Plans

As at As at As at As at As at As at
Financial Assumptions 31st March, 2017 31st March, 2016 1st April, 2015 31st March, 2017 31st March, 2016 1st April, 2015
Discount rate (per annum) 7.0% 7.8% 7.9% 7.0% 7.8% 7.9%
Salary escalation rate
(per annum)
Management employees- for 7.0% 7.0% 7.0%
first 5years
Management employees- 5.0% 5.0% 5.0%
after 5 years
Non-management employees 8.0% 8.0% 8.0%
Pension increase rate 2.5% 2.5% 2.5%
(per annum)*
Annual increase in healthcare 9.0% 9.0% 9.0%
costs (per annum)
*For management pension only.
The estimates of future salary increases, considered in actuarial valuation, takes into account of inflation, seniority, promotion and other relevant factors,
such as supply and demand in the employment market.
Demographic Assumptions
Mortality in Service: Indian Assured Lives Mortality (2006-08) Ultimate table.
Mortality in Retirement: LIC Buy-out Annuity Rates & UK Published PA (90) Annuity Rates suitably adjusted for Indian Lives.

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126 Standalone

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
F. Sensitivity Analysis
The sensitivity of the overall plan obligations to changes in the weighted key assumptions are:

Retirement Benefit Plans Other Post-Employment Benefit Plans

Change in Change in plan Change in Change in plan
assumption obligation assumption obligation
(%) (%) (%) (%)
Discount rate (per annum) Increase 0.5% -0.7% 0.5% -5.6%
Decrease 0.5% 0.7% 0.5% 6.2%
Salary escalation rate (per annum) Increase 0.3% 2.0% - -
Decrease 0.3% -2.0% - -
Pension rate Increase 0.3% 2.4% - -
Decrease 0.3% -2.4% - -
Life expectancy Increase 1 year 1.9% 1 year 4.0%
Decrease 1 year -2.0% 1 year -4.0%
Annual increase in healthcare costs (per annum) Increase - - 1.0% 12.7%
Decrease - - 1.0% -10.7%
The sensitivity analyses above have been determined based on reasonably possible changes of the respective assumptions occurring at the end
of the year and may not be representative of the actual change. It is based on a change in the key assumption while holding all other assumptions
constant. When calculating the sensitivity to the assumption, the same method used to calculate the liability recognised in the Balance Sheet has
been applied. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared with the previous year.

G. Weighted average duration and expected employers contribution for FY 2017-18 for each of the defined benefit plan

Weighted average duration (yrs.)

Year ended Year ended Expected Employers
31st March, 2017 31st March, 2016 contribution for
the next year
Gratuity 10.9 10.4 42.6
Management Pension 6.9 8.5 1.0
Officers Pension 3.9 4.0 -
Provident Fund 15.2 14.5 61.8
Post-Retirement Medical Benefits 11.9 11.5 -

42 SHARE BASED PAYMENTS

Refer note 2.4(k) for accounting policy on Share Based Payments.
The members of the Company had approved 2001 HLL Stock Option Plan at the Annual General Meeting held on 22nd June, 2001. The plan envisaged grant of
share options to eligible employees at market price as defined in Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.
This plan was amended and revised vide 2006 HLL Performance Share Scheme at the Annual General Meeting held on 29th May, 2006. This scheme
provided for conditional grant of Performance Shares at nominal value to eligible management employees as determined by the Compensation
Committee of the Board of Directors from time to time, at the end of 3-year performance period. The performance measures under this scheme include
group underlying sales growth and free cash flow. The scheme also provided for Par Awards for the managers at different work levels.
The 2006 scheme was further amended and revised vide 2012 HUL Performance Share Scheme at the Annual General Meeting held on 23rd July,
2012. This scheme provided for conditional grant of Performance Shares at nominal value to eligible management employees as determined by the
Nomination and Remuneration Committee of the Board of Directors from time to time, at the end of 3-year performance period. The performance
measures under this scheme include group underlying sales growth, core operating margin improvement and operating cash flow.
The number of shares allocated for allotment under the 2006 and 2012 Performance Share Schemes is 2,00,00,000 (two crores) equity shares of ` 1/-
each. The schemes are monitored and supervised by the Nomination and Remuneration Committee of the Board of Directors in compliance with the
provisions of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and amendments thereof from time to time.
The Employee Stock Option Plan includes employees of Hindustan Unilever Limited, its subsidiaries and a subsidiary of parent Company.

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 127

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

Scheme Year Date of Numbers Vesting Conditions Exercise Period Exercise Price (`) Weighted Average
Grant of options per share Exercise Price (`)
granted per share
2001 HLL Stock 2005 27-May-05 15,47,700 Vested after three years 7 years from 132.05 132.05
Option Plan from date of grant date of vesting
2006 HLL 2012 17-Feb-12 4,20,080 1.00 1.00
Vested after three years 3 months from
Performance Interim 2012 30-Jul-12 51,385 1.00 1.00
from date of grant date of vesting
Share Scheme
2013 18-Mar-13 3,68,023 1.00 1.00
Interim 2013 29-Jul-13 25,418 1.00 1.00
2014 14-Feb-14 2,62,155 1.00 1.00
2012 HUL Interim 2014 28-Jul-14 16,805 Vested after three 1.00 1.00
3 months from
Performance 2015 13-Feb-15 1,42,038 years from date of 1.00 1.00
date of vesting
Share Scheme Interim 2015 27-Jul-15 12,322 grant 1.00 1.00
2016 11-Feb-16 1,57,193 1.00 1.00
Interim 2016 25-Jul-16 11,834 1.00 1.00
2017 13-Feb-17 1,23,887 1.00 1.00

Number of Share Options

Outstanding at Granted Forfeited/ Exercised Exercisable at Outstanding at
Scheme Year the beginning of during the Expired during during the the end of the the end of the
the year year* the year year year year

- - - - - -
2001 HLL Stock Option Plan 2005
(23,100) - - (23,100) - -
- - - - - -
2012
2006 HUL performance (3,24,629) - - (3,24,629) - -
Share Scheme - - - - - -
Interim 2012
(39,937) (18,305) - (58,242) - -
2013 3,08,705 - 3,08,705 - -
(3,19,252) (55,602) - (66,149) (3,08,705) (3,08,705)
Interim 2013 23,044 5,964 - 29,008 - -
(25,418) - (2,374) - - (23,044)
2014 2,31,763 - 41,918 74,955 1,14,890 1,14,890
(2,43,708) - (11,945) - - (2,31,763)
Interim 2014 16,805 - 1,702 - - 15,103
(16,805) - - - - (16,805)
2012 HUL Performance 2015 1,36,054 - 8,903 - - 1,27,151
Share Scheme (1,42,038) - (5,984) - - (1,36,054)
Interim 2015 12,322 - 632 - - 11,690
- (12,322) - - - (12,322)
2016 1,56,351 - 8,492 - - 1,47,859
- (1,57,193) (842) - - (1,56,351)
Interim 2016 - 11,834 - - - 11,834
- - - - - -
2017 - 1,23,887 - - - 1,23,887
- - - - - -

* Granted during the year includes additional shares granted upon meeting the vesting conditions
(figures in bracket pertain to 2015-16)

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128 Standalone

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
Weighted average equity share price at the date of exercise of options during the year was ` 864 (2015-16: ` 848).
Weighted average remaining contractual life of options as at 31st March, 2017 was 1.68 years (31st March, 2016: 1.34 years and 1st April, 2015: 1.34 years).
The value of the underlying shares has been determined by an independent valuer. The following assumptions were used for calculation of fair
value of grants in accordance with Black Scholes model:

Year ended Year ended

31st March, 2017 31st March, 2016
Risk-free interest rate (%) 6.6% 7.4%
Expected life of options (years) [(year to vesting) + (contractual option term)/2] 3.125 3.125
Expected volatility (%) 22.3% 26.3%
Dividend yield 1.9% 1.9%
The risk free interest rates are determined based on the zero-coupon sovereign bond yields with maturity equal to the expected term of the option.
Volatility calculation is based on historical stock prices using standard deviation of daily change in stock price. The historical period is taken into account
to match the expected life of the option. Dividend yield has been calculated taking into account expected rate of dividend on equity share price as on
grant date.
CASH SETTLED SHARE BASED PAYMENTS
The employees of the Company are eligible for Unilever PLC (the Holding Company) share awards namely, the Management Co-Investment Plan (MCIP),
the Global Performance Share Plan (GPSP) and the SHARES Plan. The MCIP allows eligible employees to invest up to 100% of their annual bonus in
the shares of the Holding Company and to receive a corresponding award of performance-related shares. Under GPSP, eligible employees receive
annual awards of the Holding Companys shares. The awards under MCIP and GPSP plans will vest after 3-4 years between 0% and 200% of grant level,
depending on the satisfaction of the performance metrics. The performance metrics of both MCIP and GPSP are underlying sales growth, operating
cash flow and core operating margin improvement. Under the SHARES Plan, eligible employees can invest upto EUR 200 per month in the shares of the
Holding Company and after three years one share is granted free of cost to the employees for every three shares invested, provided they hold the shares
bought for three years. The Holding Company charges the Company for the grant of shares to the Companys employees at the end of the 3 years based
on the market value of the shares on the exercise date. The Company recognises the fair value of the liability and expense for these plans over the vesting
period based on the managements estimate of the vesting and forfeiture conditions.
The Company grants share appreciation rights (SARs) to eligible employees for all cash settled share based plans mentioned above that entitles them to
a cash/shares after three years of service. The amount of payment is also determined basis increase in the share price of the Holding Company between
grant date and the time of exercise.
Details of the liabilities arising from the Companys cash settled share based payment transactions:

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Other non-current liabilities 130 102 90
Other current liabilities 86 92 88
Total carrying amount of liabilities 216 194 178
Effect of share based payment transactions on the Statement of Profit and Loss:

As at As at
31st March, 2017 31st March, 2016
Equity settled share based payments 5 19
Cash settled share based payments 89 108
Total expense on share based payments 94 127

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 129

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
43 BUSINESS COMBINATION
Refer note 3.A.(i) for treatment of business combination on first time adoption of Ind AS.
Refer note 2.4(q) for accounting policy on Business Combination.

Acquisition of Indulekha Brand

On April 07, 2016, the Company completed the acquisition of the flagship brand Indulekha from Mosons Extractions Private Limited (MEPL) and
Mosons Enterprises (collectively referred to as Mosons and acquisition of the specified intangible assets referred to as the Business acquisition). The
deal envisaged the acquisition of the trademarks Indulekha and Vayodha, intellectual property, design and knowhow for a total cash consideration of
` 330 crores (excluding taxes) and a deferred consideration of 10% of the domestic turnover of the brands each year, payable annually for a 5 year period
commencing financial year 2018-19. The transaction is accounted as business combination under Ind AS 103.
The acquisition is in line with the Companys strategic intent to strengthen its leadership position in Personal Care by providing an impetus to its play
in the evolving Premium Naturals segment. Indulekha brings to the Company, a premium brand with strong credentials around Ayurveda that will
complement its existing portfolio and strengthen its presence in the Hair Care category.
Purchase consideration transferred:
` Cr
Upfront cash consideration (including taxes) 348
Deferred contingent consideration 44
392

Deferred contingent consideration

The contingent consideration arrangement requires the Company to pay 10% of the domestic turnover of the brands each year, payable annually for a
5 year period commencing financial year 2018-19. As on the acquisition date, the fair value of contingent consideration was valued at ` 44 crores.

The determination of the fair value as at Balance Sheet date is based on discounted cash flow method. Basis the projection of the domestic turnover of
the brand, the contingent consideration is subject to revision on a yearly basis. As at 31st March 2017, the fair value of the contingent consideration is
` 49 crores which is classified as other financial liability.
Assets acquired and liabilities assumed:
The fair values of identifiable assets acquired and liabilities assumed as at the date of acquisition were:
` Cr
Specified Intangibles Assets
Indulekha Brand 311
Manufacturing Know-how and Design 59
Deferred tax asset 22
Total identifiable assets 392
Less: Liabilities assumed -
Total identifiable net assets 392
Goodwill 0
Total Net Assets 392
The deferred tax asset mainly comprises the effect of depreciation on intangible assets deductible for tax purposes.
Acquisition-related costs
In addition to cash consideration mentioned above, acquisition-related costs of ` 12 crores paid towards professional and legal fees, stamp duty etc. are
included in Exceptional Items in the Statement of Profit and Loss.
Impact of acquisition on the results
The acquired business contributed revenues of ` 75 crores and profit (before tax) of ` 7 crores to the Company for the year ended 31st March, 2017.

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130 Standalone

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
44 DISCLOSURES PURSUANT TO SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSURE
REQUIREMENTS) REGULATIONS, 2015 AND SECTION 186 OF THE COMPANIES ACT, 2013
Year ended Year ended
31st March, 2017 31st March, 2016

(a) Loans to subsidiaries

Loan to subsidiary: Ponds Exports Limited, India
Balance as at the year end 4 4
Maximum amount outstanding at any time during the year 8 12
[Ponds Export Limited has utilised the loan for meeting working capital requirements. It is
repayable over a period of 7 years and carries an average rate of interest at 7.58% (2015-16: 8.46%)]
Loan to subsidiary: Lakme Lever Private Limited, India
Balance as at the year end 194 158
Maximum amount outstanding at any time during the year 200 168
[Lakme Lever Private Limited has utilised the loan for meeting capital projects for job work
business and working capital requirements of salon business. It is repayable over a period
of 7 years and carries an average rate of interest at 7.60% (2015-16: 8.46%)]
(b) Investment by the loanees in the shares of the Company
The loanees have not made any investments in the shares of the Company

45 DISCLOSURE ON SPECIFIED BANK NOTES (SBNs)

During the year, the Company had specified bank notes (SBNs) and other denomination notes as defined in the MCA notification G.S.R. 308(E) dated 31st
March, 2017, on the details of Specified Bank Notes (SBNs) held and transacted during the period from 8th November, 2016 to 30th December, 2016, the
denomination wise SBNs and other notes as per the notification is given below:

(Amounts in `)
SBNs* Other denomination notes Total
Closing cash in hand as on 8th November, 2016 19,72,000 3,88,282 23,60,282
(+) Permitted receipts - 1,16,331 1,16,331
(-) Permitted payments - 2,33,999 2,33,999
(-) Amount deposited in banks 19,72,000 69,585 20,41,585
Closing cash in hand as on 30th December, 2016 - 2,01,029 2,01,029
* For the purpose of this clause Specified Bank Notes shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance,
Department of Economic Affairs number S.O. 3407(E), dated the 8th November, 2016.

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 131

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
46 Related Party Disclosures
A. Enterprises exercising control

(i) Holding Company : Unilever Plc

B. Enterprises where control exists

(i) Subsidiaries : Daverashola Estates Private Limited (100%)

(Extent of holding) Hindlever Trust Limited (100%)
Jamnagar Properties Private Limited (100%)
Lakme Lever Private Limited (100%)
Levers Associated Trust Limited (100%)
Levindra Trust Limited (100%)
Ponds Exports Limited (90%)
Unilever India Exports Limited (100%)
Unilever Nepal Limited (80%)
Bhavishya Alliance Child Nutrition Initiatives (100%)
(with effect from March 12, 2015) (Section 8 Company)
Hindustan Unilever Foundation (76%) (Section 8 Company)

(ii) Trust : Hindustan Unilever Limited Securitisation of Retirement Benefit

Trust (100%)

(iii) Joint Ventures : Kimberly Clark Lever Private Limited (50% control)

(iv) Key Management Personnel

(a) Executive directors : Sanjiv Mehta
PB Balaji
Pradeep Banerjee
Dev Bajpai
Geetu Verma
BP Biddappa
Priya Nair
Sandeep Kohli (with effect from 1st June, 2016)
Sudhir Sitapati (with effect from 1st July, 2016)
Srinandan Sundaram (with effect from 1st September, 2016)
Samir Singh (up to 31st May, 2016)
Punit Misra (up to 30th September, 2016)

(b) Non-executive directors : Harish Manwani

Aditya Narayan
S. Ramadorai
O. P. Bhatt
Sanjiv Misra
Kalpana Morparia

(v) Employees Benefit Plans where there is significant influence : Hind Lever Gratuity Fund
The Hind Lever Pension Fund
The Union Provident Fund

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132 Standalone

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
Disclosure of transactions between the Company and Related Parties and the status of outstanding balances as on 31st March, 2017
Year ended Year ended
31st March, 2017 31st March, 2016
Holding Company : Dividend paid 1,839 1,727
Royalty expense 1,027 876
Income from services rendered 500 473
Expenses for Services received 96 -
Outstanding as at the year end :
- Trade payables [1st April, 2015: ` 136 crores] 338 172
Subsidiaries/ Trust : Sale of finished goods / raw materials etc. 393 300
Processing charges 115 112
Sale of fixed assets - 4
Purchase of fixed assets 0 0
Investment in equity shares - -
Purchase of finished goods / raw materials etc. 12 17
Royalty income 8 9
Rent income 1 1
Management fees paid - 0
Commission paid 1 1
Expenses shared by subsidiary companies 19 16
Dividend income 167 136
Interest income 13 15
Reimbursement received/ receivable towards pension and medical 19 28
benefits
Purchase of export licences 36 8
Rent expense 0 0
Contribution to foundation 18 8
Reimbursements paid 36 7
Reimbursements received 14 7
Inter corporate loans given during the year 84 35
Inter corporate loans repaid during the year 48 53
Deposit Received 0 -
Deposit Paid 0 -
Outstanding as at the year end:
- Current account balances receivable with subsidiaries and 19 19
trust [1st April, 2015: ` 17 crores]
- Trade receivables [1st April, 2015: ` 23 crores] 34 44
- Trade payables [1st April, 2015: ` 12 crores] 35 12
- Loans & advances to subsidiaries [1st April, 2015: ` 180 crores] 198 162
- Security deposits [1st April, 2015: ` 2 crores] - 0

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 133

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

Year ended Year ended

31st March, 2017 31st March, 2016
Fellow Subsidiaries : Purchased of fixed assets 37 -
Rent income 2 1
Sale of fixed assets - 0
Income from services rendered 12 17
Management fees paid 29 13
Purchase of finished goods / raw materials etc. 581 371
Dividend paid 561 527
Royalty expense 17 11
Expenses shared by fellow subsidiary companies 6 4
Maintenance and support costs for licences and software 6 8
Reimbursements paid 49 105
Reimbursements received 34 32
Outstanding as at the year end with fellow subsidiaries
- Current account balances receivable with fellow 28 35
subsidiaries [1st April, 2015: ` 35 crores]
- Trade payables [1st April, 2015: ` 71 crores] 209 131
Joint Venture : Purchase of finished goods / raw materials etc. 303 346
Reimbursements received 95 72
Investment in equity shares - 15
Outstanding as at the year end with joint venture
- Current account balances receivable with joint venture 24 27
[1st April, 2015: ` 32 crores]
- Trade payables [1st April, 2015: ` 2 crores] 1 2
Key Management Personnel : Remuneration :
(Executive directors) - Short-term employee benefits 45 34
- Post-employment benefits* 6 5
- Share-based payments 16 13
Dividend paid 0 1
Consideration received on exercise of options 0 0
Key Management Personnel : Dividend paid 0 0
(Non-executive directors) Commission paid 2 2

Employees Benefit Plans where : Contributions during the year (Employers contribution only)
there is significant influence Outstanding as at the year end : 61 82
- Advances recoverable in cash or kind or for value to be - 17
received [1st April, 2015: Nil]
- Payables [1st April, 2015: ` 1 crore] 12 -
*As the liabilities for defined benefit plans are provided on actuarial basis for the Company as a whole, the amounts pertaining to Key Management Personnel are not included.

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134 Standalone

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
Terms and conditions of transactions with related parties
All Related Party Transactions entered during the year were in ordinary course of the business and are on arms length basis.
For the year ended 31st March, 2017, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (2015-
16: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the
related party operates.

47 The Company has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable
losses. At the year end, the Company has reviewed and ensured that adequate provision as required under any law/accounting standards for
material foreseeable losses on such long term contracts (including derivative contracts) has been made in the books of accounts.
48 The Company has presented segment information in the consolidated financial statements which are presented in the same financial report.
Accordingly, in terms of Paragraph 3 of Ind AS 108 Operating Segments, no disclosures related to segments are presented in this standalone
financial statements.

As per our report of even date For and on behalf of Board of Directors

For B S R & Co. LLP Sanjiv Mehta PB Balaji

Firm Registration No. 101248W/W - 100022 Managing Director and CEO Executive Director
Chartered Accountants [DIN: 06699923] (Finance & IT) and CFO
[DIN: 02762983]

Akeel Master Aditya Narayan Dev Bajpai

Partner Chairman - Audit Committee Executive Director
Membership No. 046768 [DIN: 00012084] Legal and Company Secretary
Membership No. FCS 3354

Aasif Malbari
Group Controller

Mumbai: 17th May, 2017 Mumbai: 17th May, 2017

Hindustan Unilever Limited Annual Report 2016-17


INDEPENDENT AUDITORS REPORT
to the Members of Hindustan Unilever Limited
Report on the Consolidated Ind AS Financial Statements
We have audited the accompanying consolidated Ind AS financial
statements of Hindustan Unilever Limited (hereinafter referred to as
the Holding Company) and its subsidiaries (together referred to as
the Group), comprising the consolidated Balance Sheet as at 31 March
2017, the consolidated Statement of Profit and Loss (including other
comprehensive income), the consolidated Statement of Cash Flows and
the consolidated Statement of Changes in Equity for the year then ended
and a summary of the significant accounting policies and other explanatory
information (hereinafter referred to as the consolidated Ind AS financial
statements).
Managements Responsibility for the Consolidated Ind AS
Financial Statements
The Holding Companys Board of Directors is responsible for the
preparation of these consolidated Ind AS financial statements in terms of
the requirements of the Companies Act, 2013 (hereinafter referred to as
the Act) that give a true and fair view of the consolidated financial position,
consolidated financial performance (including other comprehensive
income), consolidated cash flows and consolidated changes in equity of
the Group in accordance with the accounting principles generally accepted
in India, including the Indian Accounting Standards prescribed under
Section 133 of the Act, read with relevant rules issued thereunder. The
respective Board of Directors of the companies included in the Group
are responsible for maintenance of adequate accounting records in
accordance with the provisions of the Act for safeguarding the assets of
the Group and for preventing and detecting frauds and other irregularities;
the selection and application of appropriate accounting policies; making
judgments and estimates that are reasonable and prudent; and the
design, implementation and maintenance of adequate internal financial
controls, that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the standalone Ind AS financial statements that give a true
and fair view and are free from material misstatement, whether due to
fraud or error, which have been used for the purpose of preparation of the
consolidated Ind AS financial statements by the Directors of the Holding
Company, as aforesaid.
Auditors Responsibility
Our responsibility is to express an opinion on these consolidated Ind AS
financial statements based on our audit. While conducting the audit, we
have taken into account the provisions of the Act, the accounting and
auditing standards and matters which are required to be included in the
audit report under the provisions of the Act and the Rules made there
under.
We conducted our audit in accordance with the Standards on Auditing
specified under sub-section 10 of Section 143 of the Act. Those Standards
require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance about whether the consolidated
Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and the disclosures in the consolidated Ind AS financial
statements. The procedures selected depend on the auditors judgment,
including the assessment of the risks of material misstatement of the
consolidated Ind AS financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal financial
controls relevant to the Holding Companys preparation of the consolidated
Ind AS financial statements that give a true and fair view in order to design
audit procedures that are appropriate in the circumstances. An audit
Overview Reports Financial Statements 135
also includes evaluating the appropriateness of the accounting policies
used and the reasonableness of the accounting estimates made by the
Holding Companys Board of Directors, as well as evaluating the overall
presentation of the consolidated Ind AS financial statements.
We believe that the audit evidence obtained by us and the audit evidence
obtained by the other auditor in terms of their report referred to in Other
Matters paragraph below, is sufficient and appropriate to provide a basis
for our audit opinion on the consolidated Ind AS financial statements.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us and based on the consideration of report of
other auditor on separate financial statements and on the other financial
information of a subsidiary, the aforesaid consolidated Ind AS financial
statements give the information required by the Act in the manner so
required and give a true and fair view in conformity with the accounting
principles generally accepted in India including the Ind AS, of the
consolidated financial position of the Group as at 31 March 2017, and
its consolidated financial performance (including other comprehensive
income), its consolidated cash flows and consolidated statement of
changes in equity for the year ended on that date.
Other Matters
We did not audit the financial statements of one subsidiary whose financial
statements reflect total assets of Rs 309 crores and net assets of Rs 200
crores as at 31March2017, total revenues of Rs315 crores and net cash
outflows amounting to Rs 3 crores for the year ended on that date, as
considered in the consolidated Ind AS financial statements. These financial
statements have been audited by other auditor whose report has been
furnished to us by the Management and our opinion on the consolidated
Ind AS financial statements, in so far as it relates to the amounts and
disclosures included in respect of the subsidiary and our report in terms of
sub-sections (3) and (11) of Section 143 of the Act, in so far as it relates to
the aforesaid subsidiary, is based solely on the report of the other auditor.
Our opinion on the consolidated Ind AS financial statements, and our
report on Other Legal and Regulatory Requirements below, is not modified
in respect of this matter with respect to our reliance on the work done and
the report of the other auditor.
Report on Other Legal and Regulatory Requirements
1. As required by sub-section 3 of Section 143 of the Act, based on
our audit and on the consideration of report of the other auditor on
separate financial statements of a subsidiary, as noted in the Other
Matter paragraph, we report, to the extent applicable, that:
(a) We have sought and obtained all the information and explanations
which to the best of our knowledge and belief were necessary for
the purposes of our audit of the aforesaid consolidated Ind AS
financial statements.
(b) In our opinion, proper books of account as required by law
relating to preparation of the aforesaid consolidated Ind AS
financial statements have been kept so far as it appears from
our examination of those books and the reports of the other
auditors.
(c) The Consolidated Balance Sheet, the Consolidated Statement
of Profit and Loss (including other comprehensive income),
the Consolidated Statement of Cash Flows and Consolidated
Statement of Changes in Equity dealt with by this Report are in
Annual Report 2016-17 Hindustan Unilever Limited
136 Consolidated

INDEPENDENT AUDITORS REPORT (Contd.)

agreement with the relevant books of account maintained for
the purpose of preparation of the consolidated Ind AS financial
statements.
(d) In our opinion, the aforesaid consolidated Ind AS financial
statements comply with the Indian Accounting Standards
prescribed under Section 133 of the Act, read with relevant rules
issued thereunder.
(e) On the basis of the written representations received from the
directors of the Holding Company as on 31 March 2017 taken
on record by the Board of Directors of the Holding Company and
the reports of the statutory auditors of subsidiary companies
incorporated in India, none of the Directors of the Group are
disqualified as on 31 March 2017 from being appointed as a
Director of that company in terms of sub section 2 of Section 164
of the Act.
(f) With respect to the adequacy of the internal financial controls
over financial reporting of the Holding Company and its
subsidiary companies incorporated in India and the operating
effectiveness of such controls, refer to our separate report in
Annexure A;
(g) With respect to the other matters to be included in the Auditors
Report in accordance with Rule 11 of the Companies (Audit
and Auditors) Rules, 2014, in our opinion and to the best of our
information and according to the explanations given to us and
based on the consideration of the report of the other auditors
on separate financial statements of a subsidiary, as noted in the
Other Matter paragraph:
i. The consolidated Ind AS financial statements disclose the
impact of pending litigations on the consolidated financial
position of the Group Refer Note 26 to the consolidated Ind
AS financial statements;
ii. Provision has been made in the consolidated Ind AS financial
statements, as required under the applicable laws or
accounting standards, for material foreseeable losses, if
any, on long-term contracts including derivatives contracts
Refer note 49 to the consolidated Ind AS financial statements;
iii. There has been no delay in transferring amounts, required
to be transferred, to the Investor Education and Protection
Fund by the Holding Company and its subsidiary companies
incorporated in India; and
iv. The requisite disclosures in the consolidated Ind AS
financial statements for holdings as well as dealings in
Specified Bank Notes during the period from 8November
2016 to 30 December 2016 have been provided with respect
to Holding Company and subsidiaries incorporated in India.
Based on audit procedures and reliance on management
representation, we report that the disclosures are in
accordance with books of account and other records
maintained by the Holding Company and subsidiaries
incorporated in India and as produced to us by the
Management of the Holding Company- Refer Note 48 to the
consolidated Ind AS financial statements.
For B S R & Co. LLP
Chartered Accountants
Firms Registration No:
101248W/ W - 100022
Akeel Master
Partner
Membership No: 046768
Mumbai: 17 May 2017

Hindustan Unilever Limited Annual Report 2016-17


ANNEXURE A
To The Independent Auditors Report - 31March 2017
(Referred to in our report of even date)
Report on the Internal Financial Controls under Clause
(i) of Sub-section 3 of Section 143 of the Companies Act, 2013
(the Act)
In conjunction with our audit of the consolidated Ind AS financial
statements of Hindustan Unilever Limited (the Holding Company) as
of and for the year ended 31 March 2017, we have audited the internal
financial controls over financial reporting of the Holding Company and its
subsidiary companies incorporated in India as of that date.
Managements Responsibility for Internal Financial Controls
The respective Board of Directors of the Holding Company and its subsidiary
companies incorporated in India, are responsible for establishing and
maintaining internal financial controls based on the internal controls
over financial reporting criteria established by the Holding Company and
its subsidiary companies incorporated in India considering the essential
components of internal controls stated in the Guidance Note on Audit of
Internal Financial Controls Over Financial Reporting (the Guidance Note)
issued by the Institute of Chartered Accountants of India (ICAI). These
responsibilities include the design, implementation and maintenance of
adequate internal financial controls that were operating effectively for
ensuring the orderly and efficient conduct of its business, including adherence
to the respective companys policies, the safeguarding of its assets, the
prevention and detection of frauds and errors, the accuracy and completeness
of the accounting records, and the timely preparation of reliable financial
information, as required under the Companies Act, 2013 (the Act).
Auditors Responsibility
Our responsibility is to express an opinion on the Holding Companys, and
its subsidiary companies incorporated in India, internal financial controls
over financial reporting based on our audit. We conducted our audit in
accordance with the Guidance Note issued by the ICAI and the Standards
on Auditing, issued by ICAI and deemed to be prescribed under section
143(10) of the Act, to the extent applicable to an audit of internal financial
controls, both issued by the ICAI. Those Standards and the Guidance Note
require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance about whether adequate internal
financial controls over financial reporting was established and maintained
and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about
the adequacy of the internal financial control system over financial
reporting and their operating effectiveness. Our audit of internal financial
controls over financial reporting included obtaining an understanding of
internal financial controls over financial reporting, assessing the risk that
a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk.
The procedures selected depend on the auditors judgement, including the
assessment of the risks of material misstatement of the consolidated Ind
AS financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the Holding
Companys and its subsidiary companies incorporated in India, internal
Overview Reports Financial Statements 137
financial control system over financial reporting.
Meaning of Internal Financial Controls Over Financial
Reporting
A companys internal financial controls over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles. A companys
internal financial controls over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts
and expenditures of the company are being made only in accordance with
authorisations of management and directors of the company; and (3)
provide reasonable assurance regarding prevention or timely detection of
unauthorised acquisition, use, or disposition of the companys assets that
could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over
Financial Reporting
Because of the inherent limitations of internal financial controls over
financial reporting, including the possibility of collusion or improper
management override of controls, material misstatements due to error or
fraud may occur and not be detected. Also, projections of any evaluation of
the internal financial controls over financial reporting to future periods are
subject to the risk that the internal financial control over financial reporting
may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Holding Company and its subsidiary companies
incorporated in India, have in all material respects, an adequate internal
financial control system over financial reporting and such internal
financial controls over financial reporting were operating effectively as
at 31March2017, based on the internal controls over financial reporting
criteria established by the Holding Company and its subsidiary companies,
considering the essential components of internal controls stated in the
Guidance Note issued by the ICAI.
For B S R & Co. LLP
Chartered Accountants
Firms Registration No:
101248W/ W - 100022
Akeel Master
Partner
Membership No: 046768
Mumbai: 17 May 2017
Annual Report 2016-17 Hindustan Unilever Limited
138 Consolidated

Consolidated Balance Sheet

As at 31st March, 2017
(All amounts in ` crores, unless otherwise stated)
As at As at As at
Particulars Note
31st March, 2017 31st March, 2016 1st April, 2015

ASSETS

Non-current assets

Property, plant and equipment 4A 3,968 3,165 2,676

Capital work-in-progress 4B 229 408 511

Goodwill 5A 0 - -

Other intangible assets 5A 370 12 22

Goodwill on consolidation 5B 81 81 81

Investments in subsidiaries, associates and joint venture 6 - 26 20

Financial assets

Investments 7 6 6 6

Other financial assets 8 128 147 120

Non-current tax assets (net) 9E 461 381 363

Deferred tax assets (net) 9C 170 168 157

Other non-current assets 10 75 55 50

Current assets

Inventories 11 2,541 2,726 2,816

Financial assets

Investments 7 3,788 2,560 2,773

Trade receivables 12 1,085 1,264 1,007

Cash and cash equivalents 13 628 830 805

Bank balances other than cash and cash equivalents

14 1,200 2,179 1,881
mentioned above

Other financial assets 8 331 239 295

Other current assets 15 598 525 439

Assets held for sale 16 47 22 9

TOTAL ASSETS 15,706 14,794 14,031

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 139

Consolidated Balance Sheet (CONTd.)

As at 31st March, 2017
(All amounts in ` crores, unless otherwise stated)
As at As at As at
Particulars Note
31st March, 2017 31st March, 2016 1st April, 2015
EQUITY AND LIABILITIES

Equity

Equity share capital 17 216 216 216

Other equity 18A 6,528 6,357 6,238

Non-controlling interests 19 22 20 19

Liabilities

Non-current liabilities

Financial liabilities

Other financial liabilities 20 73 20 20

Provisions 21 514 623 518

Non-current tax liabilities (net) 9E 432 306 230

Deferred tax liabilities (net) 9C - 1 -

Other non-current liabilities 22 207 184 134

Current liabilities

Financial liabilities

Borrowings 23 277 177 -

Trade payables

Dues to micro and small enterprises 24 0 - -

Dues to others 24 6,186 5,685 5,441

Other financial liabilities 20 195 258 223

Other current liabilities 25 664 654 762

Provisions 21 392 293 230

TOTAL EQUITY AND LIABILITIES 15,706 14,794 14,031
Basis of preparation, measurement and significant
2
accounting policies

First time adoption of Ind AS 3

Contingent liabilities, capital and other commitments 26

The accompanying notes are an integral part of these financial statements

As per our report of even date For and on behalf of Board of Directors
For B S R & Co. LLP Sanjiv Mehta PB Balaji
Firm Registration No. 101248W/W - 100022 Managing Director and CEO Executive Director
Chartered Accountants [DIN: 06699923] (Finance & IT) and CFO
[DIN: 02762983]
Akeel Master Aditya Narayan Dev Bajpai
Partner Chairman - Audit Committee Executive Director
Membership No. 046768 [DIN: 00012084] Legal and Company Secretary
Membership No. FCS 3354
Aasif Malbari
Group Controller
Mumbai: 17th May, 2017 Mumbai: 17th May, 2017

Annual Report 2016-17 Hindustan Unilever Limited

140 Consolidated

Statement of Consolidated Profit and Loss

For the year ended 31st March, 2017
(All amounts in ` crores, unless otherwise stated)

Year ended Year ended

Particulars Note
31st March, 2017 31st March, 2016

INCOME
Revenue from operations 27 35,759 34,616
Other income 28 369 423
TOTAL INCOME 36,128 35,039
EXPENSES
Cost of materials consumed 29 11,946 11,812
Purchases of stock-in-trade 30 4,223 3,972
Changes in inventories of finished goods (including stock-in-trade) and work-in-progress 31 144 83
Excise duty 32 2,597 2,430
Employee benefits expenses 33 1,743 1,680
Finance costs 34 35 17
Depreciation and amortisation expense 35 432 353
Other expenses 36 8,766 8,619
TOTAL EXPENSES 29,886 28,966
Profit before exceptional items and tax 6,242 6,073
Exceptional items 37 237 (31)
Profit before tax 6,479 6,042
Share of net loss from Joint venture accounted for using equity method 6B - (9)
Profit before tax from Continuing Operation 6,479 6,033
Tax expenses
Current tax 9A (1,947) (1,879)
Deferred tax credit/(charge) 9A (30) 4
Profit after tax from Continuing Operations (A) 4,502 4,158
Loss from discontinued operations before tax 38A (13) (6)
Tax expenses of discontinued operations 38A 1 (1)
Loss from discontinued operations after tax (B) (12) (7)
PROFIT FOR THE YEAR (A+B) 4,490 4,151
OTHER COMPREHENSIVE INCOME
Items that will not be reclassified subsequently to profit or loss
Remeasurements of the net defined benefit plans 18B (33) (16)
Income tax relating to items that will not be reclassified subsequently to profit or loss
Remeasurements of the net defined benefit plans 9A 11 5
Items that will be reclassified subsequently to profit or loss
Fair value of debt instruments through other comprehensive income 18B 2 (2)
Income tax relating to items that will be reclassified subsequently to profit or loss
Fair value of Debt instruments through other comprehensive income 9A (0) 1
OTHER COMPREHENSIVE INCOME FOR THE YEAR (C) (20) (12)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR (A+B+C) 4,470 4,139

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 141

Statement of Consolidated Profit and Loss (CONTD.)

For the year ended 31st March, 2017
(All amounts in ` crores, unless otherwise stated)

Year ended Year ended

Particulars Note
31st March, 2017 31st March, 2016

Profit attributable to:

Owners of the Company 4,476 4,139

Non-controlling interests 14 12

Other Comprehensive income attributable to:

Owners of the Company (20) (12)

Non-controlling interests (0) (0)

Total Comprehensive income attributable to:

Owners of the Company 4,456 4,127

Non-controlling interests 14 12

Earnings per equity share from Continuing Operations

Basic (Face value of ` 1 each) 39A ` 20.68 ` 19.13

Diluted (Face value of ` 1 each) 39A ` 20.68 ` 19.12

Earnings per equity share from Discontinued Operations

Basic (Face value of ` 1 each) 39B ` (0.06) ` (0.03)

Diluted (Face value of ` 1 each) 39B ` (0.06) ` (0.03)

Earnings per equity share from continuing and discontinued operations

Basic (Face value of ` 1 each) ` 20.62 ` 19.10

Diluted (Face value of ` 1 each) ` 20.62 ` 19.09

Basis of preparation, measurement and significant accounting policies 2

First time adoption of Ind AS 3
The accompanying notes are an integral part of these financial statements
As per our report of even date For and on behalf of Board of Directors
For B S R & Co. LLP Sanjiv Mehta PB Balaji
Firm Registration No. 101248W/W - 100022 Managing Director and CEO Executive Director
Chartered Accountants [DIN: 06699923] (Finance & IT) and CFO
[DIN: 02762983]
Akeel Master Aditya Narayan Dev Bajpai
Partner Chairman - Audit Committee Executive Director
Membership No. 046768 [DIN: 00012084] Legal and Company Secretary
Membership No. FCS 3354
Aasif Malbari
Group Controller
Mumbai: 17th May, 2017 Mumbai: 17th May, 2017

Annual Report 2016-17 Hindustan Unilever Limited

 142

Consolidated Statement of Changes in Equity

For the year ended 31st March, 2017
(All amounts in ` crores, unless otherwise stated)
A. EQUITY SHARE CAPITAL
Consolidated

Note Balance
As at 1st April, 2015 216
Changes in equity share capital during the year 0
As at 31st March, 2016 216
Changes in equity share capital during the year 0
As at 31st March, 2017 17 216

B. OTHER EQUITY

Reserves and Surplus Items of Other Comprehensive Income Grand Total

Hindustan Unilever Limited Annual Report 2016-17

Employee Debt instruments Total Attributable
Capital Securities Employees Export Remeasurements
Capital Stock Options General Retained Other through Other Attributable to Non-
Redemption Premium Housing profit of net defined Total
Reserve Outstanding Reserve Earnings Reserves Comprehensive to owners of controlling
Reserve Reserve Reserve reserves benefit plans
Account Income the Company Interest
As at 1st April, 2015 4 6 81 41 2,301 3,789 9 6 0 - 1 6,238 19 6,257

Profit for the year - - - - - 4,139 - - - - - 4,139 12 4,151

Transfer to Employees
- - - - - (37) - 37 - - - - - -
Housing Reserve

Other comprehensive
- - - - - - - - (11) (1) (12) (0) (12)
income for the year

Total comprehensive
- - - - - 4,102 - 37 - (11) (1) 4,127 12 4,139
income for the year

Dividend on equity shares

- - - - - (3,354) - - - - - (3,354) (11) (3,365)
for the year

Dividend distribution tax - - - - - (673) - - - - - (673) - (673)

Exercise of employee
- - 17 (17) - - - - - - - - - -
stock options

Share based payment

- - - 19 - - - - - - - 19 - 19
credit

As at 31st March, 2016 4 6 98 43 2,301 3,864 9 43 0 (11) 0 6,357 20 6,377

 Consolidated Statement of Changes in Equity
For the year ended 31st March, 2017
(All amounts in ` crores, unless otherwise stated)
Reserves and Surplus Items of Other Comprehensive Income Grand Total
Employee Debt instruments Total Attributable
Capital Securities Employees Export Remeasurements
Capital Stock Options General Retained Other through Other Attributable to Non-
Redemption Premium Housing profit of net defined Total
Reserve Outstanding Reserve Earnings Reserves Comprehensive to owners of controlling
Reserve Reserve Reserve reserves benefit plans
Account Income the Company Interest
Profit for the year - - - - - 4,476 - - - - - 4,476 14 4,490
Transfer to Employees
- - - - - (5) - 5 - - - - -
Housing Reserve

Other comprehensive
- - - - - - - - - (22) 2 (20) (0) (20)
income for the year

Total comprehensive
- - - - - 4,471 - 5 - (22) 2 4,456 14 4,470
income for the year

Dividend on equity shares

- - - - - (3,571) - - - - - (3,571) (12) (3,583)
for the year

Dividend distribution tax - - - - - (718) - - - - - (718) - (718)

Exercise of employee
- - 18 (18) - - - - - - - 0 - 0
stock options

Share based payment

- - - 4 - - - - - - - 4 - 4
credit
As at 31st March, 2017 4 6 116 29 2,301 4,046 9 48 0 (33) 2 6,528 22 6,550

a) Refer note 18B for nature and purpose of reserves.

b) The Scheme of Arrangement (Scheme) between the Company and its Members, envisages the transfer of balance of ` 2,187 crores standing to the credit of General Reserves to the Profit
and Loss account (currently retained earnings). The Scheme, under relevant sections of The Companies Act, 1956 and 2013, was approved in annual general meeting held on 30th June
2016 and is now pending for approval with National Company Law Tribunal (NCLT).

The accompanying notes are an integral part of these financial statements

As per our report of even date For and on behalf of Board of Directors
For B S R & Co. LLP Sanjiv Mehta PB Balaji
Firm Registration No. 101248W/W - 100022 Managing Director and CEO Executive Director
Chartered Accountants [DIN: 06699923] (Finance & IT) and CFO
[DIN: 02762983]
Akeel Master Aditya Narayan Dev Bajpai
Partner Chairman - Audit Committee Executive Director
Membership No. 046768 [DIN: 00012084] Legal and Company Secretary
Membership No. FCS 3354
Aasif Malbari
Group Controller

Annual Report 2016-17 Hindustan Unilever Limited

Mumbai: 17th May, 2017 Mumbai: 17th May, 2017
Overview Reports Financial Statements 143
144 Consolidated

Consolidated Statement of Cash Flows

For the year ended 31st March, 2017
(All amounts in ` crores, unless otherwise stated)
Year ended Year ended
31st March, 2017 31st March, 2016
A CASH FLOW FROM OPERATING ACTIVITIES:
Profit before exceptional items and tax 6,229 6,058
Adjustments for:
Depreciation and amortisation expenses 432 353
(Gain)/loss on sale of non-current assets held for sale 14 3
Interest income (260) (323)
Dividend income (14) (33)
Fair value (gain)/loss on investments (86) (67)
Net (gain)/loss on sale of investments (9) -
Interest expense 35 17
Provision for expenses on employee stock options 4 19
Impairment of non-current investments 0 -
Provision/(write back) for doubtful debts and advances (net) 4 (4)
Bad debts/assets written off 2 5
Mark-to-market (gain)/loss on derivative financial instruments (1) (3)
Cash Generated from operations before working capital changes 6,350 6,025

Adjustments for:
(Increase)/decrease in trade receivables 173 (257)
(Increase)/decrease in other non-current financial assets 19 (26)
(Increase)/decrease in other current financial assets (82) 79
(Increase)/decrease in other non-current assets (7) 7
(Increase)/decrease in other current assets (74) (83)
(Increase)/decrease in inventories 186 89
Increase/(decrease) in trade payables 501 164
Increase/(decrease) in other non-current financial liabilities 31 1
Increase/(decrease) in other current financial liabilities (78) 11
Increase/(decrease) in non-current provisions (39) 32
Increase/(decrease) in current provisions 63 (27)
Increase/(decrease) in other non-current liabilities 12 37
Increase/(decrease) in other current liabilities 10 (108)
Cash generated from operations 7,065 5,944

Taxes paid (net of refunds) (1,859) (1,765)

Cash flow before exceptional items 5,206 4,179
Exceptional items:
Amounts paid for other restructuring activities (21) (8)
Net cash (used in) / generated from operating activities - [A] 5,185 4,171
B CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (1,113) (810)
Sale proceeds of property, plant and equipment 9 38
Purchase of Intangibles (348) -
Investment in equity shares of a joint venture (0) (6)
Hindustan Unilever Limited Annual Report 2016-17
 Overview Reports Financial Statements 145

Statement of Cash Flows (ConTd.)

For the year ended 31st March, 2017
(All amounts in ` crores, unless otherwise stated)

Year ended Year ended

31st March, 2017 31st March, 2016
Purchase of non-current investments 0 -
Sale proceeds of non-current investments 9 -
Purchase of current investments (31,214) (20,660)
Sale of current investments 30,074 20,937
Redemption/maturity of bank deposits (having original maturity of more than 3 months) 2,652 2,398
Investment in bank deposits (having original maturity of more than 3 months) (1,662) (2,687)
Investment in non-current deposits with banks (1) -
Interest received 264 315
Dividend received from others 14 33
Cash flow before exceptional items (1,316) (442)
Exceptional items:
Consideration received on disposal of surplus properties 167 61
Consideration received on disposal of subsidiary/ business 20 161
Taxes paid for exceptional items (44) (62)
Net cash (used in) / generated from investing activities - [B] (1,173) (282)

C CASH FLOW FROM FINANCING ACTIVITIES:

Dividends paid (3,572) (3,354)
Dividend distribution tax paid (717) (673)
Amounts deposited in bank accounts towards unpaid dividends (11) (12)
Amount borrowed for short term purpose 460 177
Amount (repaid) for short term purpose (360) -
Interest paid (14) (2)
Proceeds from share allotment under employee stock options/ performance share schemes 0 -
Net cash (used in) / generated financing activities - [C] (4,214) (3,864)

Net increase/(decrease) in cash and cash equivalents - [A+B+C] (202) 25

Add: Cash and cash equivalents at the beginning of the year (refer Note 13) 830 805
Cash and cash equivalents at the end of the year (refer Note 13) 628 830

Note: The above Statement of Cash Flows has been prepared under the Indirect Method as set out in Ind AS 7, Statement of Cash Flows.

The accompanying notes are an integral part of these financial statements

As per our report of even date For and on behalf of Board of Directors
For B S R & Co. LLP Sanjiv Mehta PB Balaji
Firm Registration No. 101248W/W - 100022 Managing Director and CEO Executive Director
Chartered Accountants [DIN: 06699923] (Finance & IT) and CFO
[DIN: 02762983]
Akeel Master Aditya Narayan Dev Bajpai
Partner Chairman - Audit Committee Executive Director
Membership No. 046768 [DIN: 00012084] Legal and Company Secretary
Membership No. FCS 3354
Aasif Malbari
Group Controller
Mumbai: 17th May, 2017 Mumbai: 17th May, 2017

Annual Report 2016-17 Hindustan Unilever Limited

146 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017
(All amounts in ` crores, unless otherwise stated)
1 GROUP INFORMATION
Hindustan Unilever Limited (the Company) is a public limited company domiciled in India with its registered office located at Unilever House, B.D. Sawant
Marg, Chakala, Andheri (East), Mumbai 400 099. The Company is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
The Company is a market leader in the FMCG business comprising primarily of Home Care, Personal Care, Foods and Refreshments. The Company has
manufacturing facilities across the country and sells primarily in India through independent distributors and modern trade.

The Company, its subsidiaries and its joint venture (jointly referred to as the Group herein under) considered in these consolidated financial statements are:
a) Subsidiaries

Proportion (%) of equity interest

Country of
Name of the Company Principal activities As at As at As at
incorporation
31st March, 2017 31st March, 2016 1st April, 2015
Unilever India Exports Limited India FMCG export business 100 100 100
Lakme Lever Private Limited India (i) Beauty salons 100 100 100
(ii) Job work business
Unilever Nepal Limited Nepal FMCG business 80 80 80
Pond's Export Limited India Leather products business (primarily 100 100 100
exports)
Jamnagar Properties Private Limited India Real estate Company 100 100 100
Daverashola Estates Private Limited India Real estate Company 100 100 100
Levindra Trust Limited India Discharge trust business as a trustee 100 100 100
Hindlever Trust Limited India Discharge trust business as a trustee 100 100 100
Levers Associated Trust Limited India Discharge trust business as a trustee 100 100 100
Hindustan Unilever Foundation* India Not-for-profit company in the field of 100 100 100
community development initiatives.
Bhavishya Alliance Child Nutrition India Not-for-profit company that works in 100 100 100
Initiatives* the area of social development issues

*These companies are private companies limited by shares formed under Section 25 of the Companies Act, 1956, now section 8 of the Companies Act,
2013. No dividend can be proposed and paid to the shareholders by these companies. In the event of winding up or dissolution of these companies, after
the satisfaction of all its debts and liabilities, any property whatsoever shall be given or transferred to some other institution(s) having object similar to
the objects of these companies, to be determined by the members of the these companies at or before the time of dissolution or in default thereof by the
High Court. The carrying amount of the assets and liabilities included within the consolidated financial statements to which these restrictions apply is ` 3
crores (31st March, 2016: ` 1 Crore and 1st April, 2015: ` 4 crores) and ` 1 Crore (31st March, 2016: ` 2 crores and 1st April, 2015: ` 2 crores) respectively.
b) Joint venture

Proportion (%) of equity interest

Country of
Name of the Company Principal activities As at As at As at
incorporation
31st March, 2017 31st March, 2016 1st April, 2015
Kimberly Clark Lever FMCG business (infant care and feminine care
India 50 50 50
Private Limited products)
c) Associates
Section 129(3) of the Companies Act, 2013, requires preparation of consolidated financial statement of the Group and of all the subsidiaries including
associate company and joint venture businesses in the same form and manner as that of its own. Indian Accounting Standard (Ind AS) 28 on Investments
in Associates and Joint Ventures defines Associate Group as an entity over which the investor has significant influence. It mentions that if an entity holds,
directly or indirectly through intermediaries, 20 per cent or more of the voting power of the enterprise, it is presumed that the entity has significant
influence, unless it can be clearly demonstrated that this is not the case.
The Group holds investments in the below entities which by share ownership are deemed to be an associate company:
i) Comfund Consulting Limited where the Group has 24% equity holding. This is a Non Banking Finance Company (NBFC) set up between HUL and a
partner company, currently dormant.
ii) Aquagel Chemicals (Bhavnagar) Private Limited where the Group has 26% equity and 26% preference capital holding. This is a Group engaged in
Silica business.

Hindustan Unilever Limited Annual Report 2016-17

 However, the Group does not exercise significant influence in any of the above entities, as demonstrated below :
i) The Group does not have any representation on the board of directors or corresponding governing body of the investee.
ii) The Group does not participate in policy making process.
Notes
iii) The Group does not have any material transactions with the investee.
iv) The Group does not interchange any managerial personnel.
v) The Group does not provide any essential technical information to the investee.
vi) As these are not investments strategic to the core business of HUL, these are intended to be divested/liquidated in the near future.
Since the Group does not exercise significant influence or control on decisions of the investee, these are not being construed as associate companies and therefore these have
not been consolidated in the financial statement of the Group.

d) Share of Entities in Group

Net Assets
Share in Sales of Share in Other Comprehensive Share in Total Comprehensive
(Total Assets - Total Share in Profit or Loss
Products Income Income
Liabilities)
Name of the Entity
As % of As % of As % of As % of consolidated As % of Consolidated
consolidated Amount consolidated Amount Consolidated Amount other comprehensive Amount total comprehensive Amount
net assets net Sales profit or loss income income
Parent Group
Hindustan Unilever Limited 96.2% 6,489 96.7% 33,895 100.0% 4,490 98.1% (20) 100.0% 4,470
Subsidiaries
Indian
Unilever India Exports Limited 4.7% 320 3.3% 1,163 2.0% 91 0.0% - 2.0% 91
Lakme Lever Private Limited 2.6% 177 0.1% 34 0.3% 13 0.0% - 0.3% 13
Pond's Exports Limited -0.1% (5) 0.3% 88 -0.3% (12) 0.0% - -0.3% (12)
Daverashola Estates Private 0.1% 4 0.0% - 0.0% - 0.0% - 0.0% -
Limited
Levers Associated Trust Limited 0.0% 0 0.0% - 0.0% (0) 0.0% - 0.0% (0)
Levindra Trust Limited 0.0% 0 0.0% - 0.0% (0) 0.0% - 0.0% (0)
Hindlever Trust Limited 0.0% 0 0.0% - 0.0% (0) 0.0% - 0.0% (0)
Jamnagar Properties Private 0.0% - 0.0% - -0.1% (4) 0.0% - -0.1% (4)
Limited
Hindustan Unilever Foundation 0.0% 2 0.0% - 0.1% 3 0.0% - 0.1% 3
Bhavishya Alliance Child Nutrition 0.0% 0 0.0% - 0.0% 0 0.0% - 0.0% 0
Initiatives
Foreign
Unilever Nepal Limited 1.3% 87 0.8% 277 1.2% 55 1.5% (0) 1.2% 55
Non-controlling interests in all 0.3% 22 0.0% - 0.3% 14 0.4% (0) 0.3% 14
to the financial statements for the year ended 31st March, 2017 (Contd.)

Subsidiaries
Joint Venture (Investment as per
the equity method)
Indian
Kimberly Clark Lever Private
Limited

Annual Report 2016-17 Hindustan Unilever Limited

Inter-company eliminations -5.2% (351) -1.2% (406) -3.6% (160) 0.0% - -3.6% (160)
TOTAL 100% 6,745 100% 35,051 100% 4,490 100% (20) 100% 4,470
(All amounts in ` crores, unless otherwise stated)
Overview Reports Financial Statements 147
148 Consolidated
Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
2 BASIS OF PREPARATION, MEASUREMENT AND SIGNIFICANT
ACCOUNTING POLICIES
2.1 Basis of preparation and measurement
(a) Basis of preparation
These Consolidated Financial statements have been prepared in
accordance with the Indian Accounting Standards (hereinafter referred to
as the Ind AS) as notified by Ministry of Corporate Affairs pursuant to
section 133 of the Companies Act, 2013 read with Rule 3 of the Companies
(Indian Accounting Standards) Rules, 2015 and Companies (Indian
Accounting Standards) Amendment Rules, 2016.
These Consolidated Financial statements for the year ended 31st March,
2017 are the first the Group has prepared under Ind AS. For all periods
upto and including the year ended 31st March, 2016 , the Group prepared
its Consolidated Financial statements in accordance with the accounting
standards notified under the section 133 of the Companies Act 2013,
read together with paragraph 7 of the Companies (Accounts) Rules, 2014
(hereinafter referred to as Previous GAAP) used for its statutory reporting
requirement in India immediately before adopting Ind AS. The Consolidated
Financial statements for the year ended 31st March, 2016 and the opening
Balance Sheet as at 1st April, 2015 have been restated in accordance with
Ind AS for comparative information. Reconciliations and explanations of the
effect of the transition from Previous GAAP to Ind AS on the Companys
Balance Sheet, Statement of Profit and Loss and Statement of Cash Flows
are provided in note 3.
The Consolidated Financial statements have been prepared on accrual and
going concern basis. The accounting policies are applied consistently to all
the periods presented in the Consolidated Financial statements, including
the preparation of the opening Ind AS Balance Sheet as at 1st April,
2015 being the date of transition to Ind AS. All assets and liabilities have
been classified as current or non current as per the Companys normal
operating cycle and other criteria as set out in the Division II of Schedule
III to the Companies Act, 2013. Based on the nature of products and the
time between acquisition of assets for processing and their realisation in
cash and cash equivalents, the Group has ascertained its operating cycle
as 12 months for the purpose of current or non-current classification of
assets and liabilities.
Subsidiaries are entities where the group exercise or controls more than
one-half of its total share capital. The net assets and results of acquired
businesses are included in the consolidated financial statements from
their respective dates of acquisition, being the date on which the Group
obtains control. The results of disposed businesses are included in the
consolidated financial statements up to their date of disposal, being the
date control ceases.
The consolidated financial statements have been prepared using uniform
accounting policies for like transactions and other events in similar
circumstances. The accounting policies adopted in the preparation of
financial statements are consistent with those of previous year. The
financial statements of the Company and its subsidiaries have been
combined on a line-by-line basis by adding together the book values of
like items of assets, liabilities, income and expenses, after eliminating
intra-group balances, intra-group transactions and the unrealised profits/
losses, unless cost/revenue cannot be recovered.
The excess of cost to the Group of its investment in subsidiaries, on the
acquisition dates over and above the Groups share of equity in the subsidiaries,
is recognised as Goodwill on Consolidation being an asset in the consolidated
Hindustan Unilever Limited Annual Report 2016-17
(All amounts in ` crores, unless otherwise stated)
financial statements. The said Goodwill is not amortised, however, it is tested
for impairment at each Balance Sheet date and the impairment loss, if any, is
provided for. On the other hand, where the share of equity in subsidiaries as
on the date of investment is in excess of cost of investments of the Group, it
is recognised as Capital Reserve and shown under the head Reserves and
Surplus in the consolidated financial statements.
Non-controlling interests in the net assets of consolidated subsidiaries
is identified and presented in the consolidated Balance Sheet separately
within equity.
Non-controlling interests in the net assets of consolidated subsidiaries
consists of:
(a) The amount of equity attributable to non-controlling interests at the
date on which investment in a subsidiary is made; and
(b) The non-controlling interests share of movements in equity since the
date parent subsidiary relationship came into existence.
The profit and other comprehensive income attributable to non-controlling
interests of subsidiaries are shown separately in the Statement of Profit
and Loss and Statement of Changes in Equity.
Transactions and balances with values below the rounding off norm
adopted by the Group have been reflected as 0 in the relevant notes in
these Consolidated Financial statements.
The Consolidated Financial statements of the Company for the year ended
31st March, 2017 were approved for issue in accordance with the resolution
of the Board of Directors on 17th May, 2017.
(b) Basis of measurement
These Consolidated Financial statements are prepared under the historical
cost convention unless otherwise indicated.
2.2 KEY ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of Consolidated Financial statements requires
management to make judgements, estimates and assumptions in the
application of accounting policies that affect the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from
these estimates. Continuous evaluation is done on the estimation and
judgments based on historical experience and other factors, including
expectations of future events that are believed to be reasonable. Revisions
to accounting estimates are recognised prospectively.
Information about critical judgments in applying accounting policies, as
well as estimates and assumptions that have the most significant effect to
the carrying amounts of assets and liabilities within the next financial year,
are included in the following notes:
(a) Measurement of defined benefit obligations - Note 43
(b) Measurement and likelihood of occurrence of provisions and
contingencies - Note 21 and 26
(c) Recognition of deferred tax assets - Note 9
(d) Key assumptions used in discounted cash flow projections - Note 46
(e) Measurement of consideration and assets acquired as part of
business combination - Note 46
(f) Impairment of Intangible - Note 5

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
2.3 RECENT ACCOUNTING DEVELOPMENTS
Standards issued but not yet effective:
In March 2017, the Ministry of Corporate Affairs issued the Companies
(Indian Accounting Standards) (Amendments) Rules, 2017, notifying
amendments to Ind AS 7, Statement of cash flows and Ind AS 102,
Share-based payment. The amendments are applicable to the Group
from 1st April, 2017
Amendment to Ind AS 7:
The amendment to Ind AS 7 requires the entities to provide disclosures that
enable users of Consolidated Financial statements to evaluate changes
in liabilities arising from financing activities, including both changes
arising from cash flows and non-cash changes, suggesting inclusion of
a reconciliation between the opening and closing balances in the balance
sheet for liabilities arising from financing activities, to meet the disclosure
requirement. The effect on the Consolidated Financial statements is being
evaluated by the Group.
Amendment to Ind AS 102:
The amendment to Ind AS 102 provides specific guidance to
measurement of cash-settled awards, modification of cash-settled
awards and awards that include a net settlement feature in respect of
withholding taxes.
It clarifies that the fair value of cash-settled awards is determined on a
basis consistent with that used for equity settled awards. Market-based
performance conditions and non-vesting conditions are reflected in the
fair values, but non-market performance conditions and service vesting
conditions are reflected in the estimate of the number of awards expected
to vest. Also, the amendment clarifies that if the terms and conditions of
a cash-settled share-based payment transaction are modified with the
result that it becomes an equity-settled share-based payment transaction,
the transaction is accounted for as such from the date of the modification.
Further, the amendment requires the award that include a net settlement
feature in respect of withholding taxes to be treated as equity-settled in its
entirety. The cash payment to the tax authority is treated as if it was part
of an equity settlement.
The effect on the Consolidated Financial statements is being evaluated by
the Group.
2.4 SIGNIFICANT ACCOUNTING POLICIES
(a) Property, Plant and Equipment:
Property, plant and equipment is stated at acquisition cost net of
accumulated depreciation and accumulated impairment losses, if
any. Subsequent costs are included in the assets carrying amount or
recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably. All other repairs
and maintenance are charged to the consolidated Statement of Profit and
Loss during the period in which they are incurred.
Gains or losses arising on retirement or disposal of property, plant
and equipment are recognised in the consolidated Statement of Profit
and Loss.
Property, plant and equipment which are not ready for intended use
as on the date of Balance Sheet are disclosed as Capital work-in-
progress.
Depreciation is provided on a pro-rata basis on the straight line method
based on estimated useful life prescribed under Schedule II to the
Overview Reports Financial Statements 149
(All amounts in ` crores, unless otherwise stated)
Companies Act, 2013 with the exception of the following:
plant and equipment is depreciated over 3 to 21 years based on the
technical evaluation of useful life done by the management.
assets costing ` 5,000 or less are fully depreciated in the year of
purchase.
Freehold land is not depreciated.
The residual values, useful lives and method of depreciation of property,
plant and equipment is reviewed at each financial year end and adjusted
prospectively, if appropriate.
Upon first-time adoption of Ind AS, the Group has elected to measure
all its property, plant and equipment at the Previous GAAP carrying
amount as its deemed cost on the date of transition to Ind AS i.e.,
1stApril,2015.
(b) Intangible Assets:
Separately purchased intangible assets are initially measured at cost.
Intangible assets acquired in a business combination are recognised at fair
value at the acquisition date. Subsequently, intangible assets are carried
at cost less any accumulated amortisation and accumulated impairment
losses, if any.
The useful lives of intangible assets are assessed as either finite or
indefinite. Finite-life intangible assets are amortised on a straight-
line basis over the period of their expected useful lives. Estimated
useful lives by major class of finite-life intangible assets are as
follows:
Design - 10 years
Know-how - 10 years
Computer software - 5 years
The amortisation period and the amortisation method for finite-life
intangible assets is reviewed at each financial year end and adjusted
prospectively, if appropriate.
Indefinite-life intangibles mainly consist of brands/trademarks. The
assessment of indefinite life is reviewed annually to determine whether
the indefinite life continues, if not, it is impaired or changed prospectively
basis revised estimates.
Goodwill is initially recognised based on the accounting policy for business
combinations (refer note 46). These assets are not amortised but are
tested for impairment annually.
Upon first-time adoption of Ind AS, the Company has elected to measure
its intangible assets at the Previous GAAP carrying amount as its deemed
cost on the date of transition to Ind AS i.e., 1st April,2015.
(c) Inventories:
Inventories are valued at the lower of cost and net realisable value. Cost is
computed on a weighted average basis. Cost of finished goods and work-
in-progress include all costs of purchases, conversion costs and other
costs incurred in bringing the inventories to their present location and
condition. The net realisable value is the estimated selling price in the
ordinary course of business less the estimated costs of completion and
estimated costs necessary to make the sale.
Annual Report 2016-17 Hindustan Unilever Limited
150 Consolidated
Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(d) Cash and Cash Equivalents:
Cash and cash equivalents are short-term (three months or less from the
date of acquisition), highly liquid investments that are readily convertible
into cash and which are subject to an insignificant risk of changes in value.
(e) Assets Held for Sale:
Non-current assets or disposal groups comprising of assets and liabilities
are classified as held for sale when all of the following criterias are
met: (i) decision has been made to sell, (ii) the assets are available for
immediate sale in its present condition, (iii) the assets are being actively
marketed and (iv) sale has been agreed or is expected to be concluded
within 12 months of the Balance Sheet date.
Subsequently, such non-current assets and disposal groups classified as
held for sale are measured at the lower of its carrying value and fair value
less costs to sell. Non-current assets held for sale are not depreciated or
amortised.
(f) Financial Instruments:
Financial Assets:
Financial assets are recognised when the Company becomes a party to the
contractual provisions of the instrument.
On initial recognition, a financial asset is recognised at fair value, in case of
Financial assets which are recognised at fair value through profit and loss
(FVTPL), its transaction cost are recognised in the statement of profit and
loss. In other cases, the transaction cost are attributed to the acquisition
value of the financial asset.
Financial assets are subsequently classified as measured at
amortised cost
fair value through profit and loss (FVTPL)
fair value through other comprehensive income (FVOCI).
Financial assets are not reclassified subsequent to their recognition,
except if and in the period the group changes its business model for
managing financial assets.
Trade Receivables and Loans:
Trade receivables are initially recognised at fair value. Subsequently,
these assets are held at amortised cost, using the effective interest rate
(EIR) method net of any expected credit losses. The EIR is the rate that
discounts estimated future cash income through the expected life of
financial instrument.
Debt Instruments:
Debt instruments are initially measured at amortised cost, fair value
through other comprehensive income (FVOCI) or fair value through profit
or loss (FVTPL) till derecognition on the basis of (i) the entitys business
model for managing the financial assets and (ii) the contractual cash flow
characteristics of the financial asset.
(a) Measured at amortised cost: Financial assets that are held within a
business model whose objective is to hold financial assets in order to
collect contractual cash flows that are solely payments of principal
and interest, are subsequently measured at amortised cost using
the effective interest rate (EIR) method less impairment, if any.
Hindustan Unilever Limited Annual Report 2016-17
(All amounts in ` crores, unless otherwise stated)
The amortisation of EIR and loss arising from impairment, if any is
recognised in the Statement of Profit and Loss.
(b) Measured at fair value through other comprehensive income:
Financial assets that are held within a business model whose
objective is achieved by both, selling financial assets and collecting
contractual cash flows that are solely payments of principal and
interest, are subsequently measured at fair value through other
comprehensive income. Fair value movements are recognized in
the other comprehensive income (OCI). Interest income measured
using the EIR method and impairment losses, if any are recognised
in the Statement of Profit and Loss. On derecognition, cumulative
gain or loss previously recognised in OCI is reclassified from the
equity to other income in the Statement of Profit and Loss.
(c) Measured at fair value through profit or loss: A financial asset not
classified as either amortised cost or FVOCI, is classified as FVTPL.
Such financial assets are measured at fair value with all changes
in fair value, including interest income and dividend income if any,
recognised as other income in the Statement of Profit and Loss.
Equity Instruments:
All investments in equity instruments classified under financial assets
are initially measured at fair value , the group may, on initial recognition,
irrevocably elect to measure the same either at FVOCI or FVTPL.
The Group makes such election on an instrument-by-instrument basis. Fair
value changes on an equity instrument is recognised as other income in the
Statement of Profit and Loss unless the Company has elected to measure such
instrument at FVOCI. Fair value changes excluding dividends, on an equity
instrument measured at FVOCI are recognised in OCI. Amounts recognised
in OCI are not subsequently reclassified to the Statement of Profit and Loss.
Dividend income on the investments in equity instruments are recognised as
other income in the Statement of Profit and Loss.
Derecognition
The Group derecognises a financial asset when the contractual rights
to the cash flows from the financial asset expire, or it transfers the
contractual rights to receive the cash flows from the asset.
Impairment of Financial Asset
Expected credit losses are recognized for all financial assets subsequent
to initial recognition other than financials assets in FVTPL category.
For financial assets other than trade receivables, as per Ind AS 109, the
Group recognises 12month expected credit losses for all originated or
acquired financial assets if at the reporting date the credit risk of the
financial asset has not increased significantly since its initial recognition.
The expected credit losses are measured as lifetime expected credit
losses if the credit risk on financial asset increases significantly since
its initial recognition. The Groups trade receivables do not contain
significant financing component and loss allowance on trade receivables
is measured at an amount equal to life time expected losses i.e. expected
cash shortfall.
The impairment losses and reversals are recognised in Statement of Profit
and Loss.
Financial Liabilities:
Initial recognition and measurement
Financial liabilities are recognised when the Group becomes a party to the
contractual provisions of the instrument. Financial liabilities are initially

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
measured at the amortised cost unless at initial recognition, they are
classified as fair value through profit and loss. In case of trade payables,
they are initially recognised at fair value and subsequently, these liabilities
are held at amortised cost, using the effective interest method.
Subsequent measurement
Financial liabilities are subsequently measured at amortised cost using
the EIR method. Financial liabilities carried at fair value through profit or
loss are measured at fair value with all changes in fair value recognised in
the Statement of Profit and Loss.
Derecognition
A financial liability is derecognised when the obligation specified in the
contract is discharged, cancelled or expires.
(g) Provisions and Contingent Liabilities:
Provisions are recognised when the Group has a present obligation (legal
or constructive) as a result of a past event, it is probable that an outflow
of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the
obligation. Provisions are measured at the best estimate of the expenditure
required to settle the present obligation at the Balance Sheet date.
If the effect of the time value of money is material, provisions are
discounted to reflect its present value using a current pre-tax rate that
reflects the current market assessments of the time value of money and
the risks specific to the obligation. When discounting is used, the increase
in the provision due to the passage of time is recognised as a finance cost.
Contingent liabilities are disclosed when there is a possible obligation
arising from past events, the existence of which will be confirmed only by
the occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the Group or a present obligation that
arises from past events where it is either not probable that an outflow of
resources will be required to settle the obligation or a reliable estimate of
the amount cannot be made.
(h) Revenue Recognition:
Revenue from sale of goods is recognised when all the significant risks and
rewards of ownership in the goods are transferred to the buyer as per the
terms of the contract, there is no continuing managerial involvement with
the goods and the amount of revenue can be measured reliably. The Group
retains no effective control of the goods transferred to a degree usually
associated with ownership and no significant uncertainty exists regarding
the amount of the consideration that will be derived from the sale of
goods. Revenue is measured at fair value of the consideration received or
receivable, after deduction of any trade discounts, volume rebates and any
taxes or duties collected on behalf of the government which are levied on
sales such as sales tax, value added tax, etc.
Income from export incentives such as duty drawback and premium on sale
of import licenses, and lease license fee are recognised on accrual basis.
Income from services rendered is recognised based on agreements/
arrangements with the customers as the service is performed in proportion
to the stage of completion of the transaction at the reporting date and the
amount of revenue can be measured reliably.
Interest income is recognized using the effective interest rate (EIR) method.
(i) Expenditure:
Expenses are accounted on accrual basis.
Overview Reports Financial Statements 151
(All amounts in ` crores, unless otherwise stated)
(j) Employee Benefits:
Defined contribution plans
Contributions to defined contribution schemes such as employees state
insurance, labour welfare fund, superannuation scheme, employee
pension scheme etc. are charged as an expense based on the amount of
contribution required to be made as and when services are rendered by
the employees. Groups provident fund contribution, in respect of certain
employees, is made to a government administered fund and charged as
an expense to the Statement of Profit and Loss. The above benefits are
classified as Defined Contribution Schemes as the Group has no further
defined obligations beyond the monthly contributions.
Defined benefit plans
In respect of certain employees, provident fund contributions are
made to a trust administered by the Group. The interest rate payable
to the members of the trust shall not be lower than the statutory rate
of interest declared by the Central Government under the Employees
Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall,
if any, shall be made good by the Group. The liability in respect of the
shortfall of interest earnings of the Fund is determined on the basis
of an actuarial valuation. The Group also provides for retirement/post-
retirement benefits in the form of gratuity, pensions (in respect of certain
employees), compensated absences (in respect of certain employees) and
medical benefits including to the employees of Indian subsidiaries and a
subsidiary of parent Company.
For defined benefit plans, the amount recognised as Employee benefit
expenses in the Statement of Profit and Loss is the cost of accruing
employee benefits promised to employees over the year and the costs
of individual events such as past/future service benefit changes and
settlements (such events are recognised immediately in the Statement
of Profit and Loss). The amount of net interest expense calculated by
applying the liability discount rate to the net defined benefit liability
or asset is charged or credited to Finance costs in the Statement
of Profit and Loss. Any differences between the interest income on
plan assets and the return actually achieved, and any changes in the
liabilities over the year due to changes in actuarial assumptions or
experience adjustments within the plans, are recognised immediately in
Other comprehensive income and subsequently not reclassified to the
Statement of Profit and Loss.
The defined benefit plan surplus or deficit on the Balance Sheet comprises
the total for each plan of the fair value of plan assets less the present
value of the defined benefit liabilities (using a discount rate by reference
to market yields on government bonds at the end of the reporting period).
All defined benefit plans obligations are determined based on valuations,
as at the Balance Sheet date, made by independent actuary using the
projected unit credit method. The classification of the Groups net obligation
into current and non-current is as per the actuarial valuation report.
Termination benefits
Termination benefits, in the nature of voluntary retirement benefits or
termination benefits arising from restructuring, are recognised in the
Statement of Profit and Loss. The Company recognises termination
benefits at the earlier of the following dates:
(a) when the Company can no longer withdraw the offer of those benefits;
or
(b) when the Company recognises costs for a restructuring that is within
the scope of Ind AS 37 and involves the payment of termination
benefits.
Annual Report 2016-17 Hindustan Unilever Limited
152 Consolidated
Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
Benefits falling due more than 12 months after the end of the reporting
period are discounted to their present value.
Share-Based Payments:
Employees of the Group receive remuneration in the form of share-based
payments in consideration of the services rendered.
Under the equity settled share based payment, the fair value on the
grant date of the awards given to employees is recognised as employee
benefit expenses with a corresponding increase in equity over the vesting
period. The fair value of the options at the grant date is calculated by
an independent valuer basis Black Scholes model. At the end of each
reporting period, apart from the non market vesting condition, the expense
is reviewed and adjusted to reflect changes to the level of options expected
to vest. When the options are exercised, the Company issues fresh equity
shares.
For cash-settled share based payments, the fair value of the amount
payable to employees is recognised as employee benefit expenses with a
corresponding increase in liabilities, over the period of non market vesting
conditions getting fulfilled. The liability is remeasured at each reporting
period up to, and including the settlement date, with changes in fair value
recognised in employee benefits expenses. Refer Note 44 for details.
Staff Bonus and Staff quarters
Staff bonus and staff quarters are accounted in accordance with the
provisions of the Bonus Act, 2030 and Labor Act, 2048 respectively. In
accordance with the decision of Honorable Supreme Court, the Group has
set aside Employees Housing Reserve for the purpose of construction of
staff quarters in line with the requirement of section 41(2) of the Labor Act,
2048. This allocation has been done for all years including previous years
since financial year 2005-06.
(k) Impairment of Non-Financial Assets:
Assessment for impairment is done at each Balance Sheet date as to
whether there is any indication that a non-financial asset may be impaired.
Indefinite life intangibles are subject to a review for impairment annually
or more frequently if events or circumstances indicate that it is necessary.
For the purpose of assessing impairment, the smallest identifiable
group of assets that generates cash inflows from continuing use that are
largely independent of the cash inflows from other assets or groups of
assets is considered as a cash generating unit. Goodwill acquired in a
business combination is, from the acquisition date, allocated to each of
the Companys cash-generating units that are expected to benefit from
the synergies of the combination, irrespective of whether other assets or
liabilities of the acquiree are assigned to those units.
If any indication of impairment exists, an estimate of the recoverable
amount of the individual asset/cash generating unit is made. Asset/cash
generating unit whose carrying value exceeds their recoverable amount
are written down to the recoverable amount by recognising the impairment
loss as an expense in the Statement of Profit and Loss. The impairment
loss is allocated first to reduce the carrying amount of any goodwill (if any)
allocated to the cash generating unit and then to the other assets of the unit,
pro rata based on the carrying amount of each asset in the unit. Recoverable
amount is higher of an assets or cash generating units fair value less
cost of disposal and its value in use. Value in use is the present value of
estimated future cash flows expected to arise from the continuing use of an
asset or cash generating unit and from its disposal at the end of its useful
life. Assessment is also done at each Balance Sheet date as to whether
there is any indication that an impairment loss recognised for an asset in
prior accounting periods may no longer exist or may have decreased, basis
the assessment a reversal of an impairment loss for an asset other than
goodwill is recognised in the Statement of Profit and Loss account.
Hindustan Unilever Limited Annual Report 2016-17
(All amounts in ` crores, unless otherwise stated)
(l) Income Taxes:
Income tax expense for the year comprises of current tax and deferred tax.
It is recognised in the Statement of Profit and Loss except to the extent
it relates to a business combination or to an item which is recognised
directly in equity or in other comprehensive income.
Current tax is the expected tax payable/receivable on the taxable income/
loss for the year using applicable tax rates at the Balance Sheet date, and
any adjustment to taxes in respect of previous years. Interest income/
expenses and penalties, if any, related to income tax are included in
current tax expense.
Deferred tax is recognised in respect of temporary differences between the
carrying amount of assets and liabilities for financial reporting purposes
and the corresponding amounts used for taxation purposes.
A deferred tax liability is recognised based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted, or substantively enacted, by the end of the
reporting period. Deferred tax assets are recognised only to the extent that
it is probable that future taxable profits will be available against which the
asset can be utilised. Deferred tax assets are reviewed at each reporting
date and reduced to the extent that it is no longer probable that the related
tax benefit will be realised.
Current tax assets and current tax liabilities are offset when there is a
legally enforceable right to set off the recognised amounts and there is
an intention to settle the asset and the liability on a net basis. Deferred
tax assets and deferred tax liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities;
and the deferred tax assets and the deferred tax liabilities relate to income
taxes levied by the same taxation authority.
(m) Leases:
Leases in which a substantial portion of the risks and rewards of ownership
are retained by the lessor are classified as operating leases. Payments and
receipts under such leases are recognised to the Statement of Profit and
Loss on a straight-line basis over the term of the lease unless the lease
payments to the lessor are structured to increase in line with expected
general inflation to compensate for the lessors expected inflationary cost
increases, in which case the same are recognised as an expense in line
with the contractual term.
Leases are classified as finance leases whenever the terms of the lease
transfer substantially all the risks and rewards incidental to ownership to
the lessee.
(n) Foreign Currencies:
The Consolidated Financial statements are presented in `, the functional
currency of the group. Items included in the Consolidated Financial
statements of the Group are recorded using the currency of the primary
economic environment in which the Group operates (the functional
currency).
Foreign currency transactions are translated into the functional currency
using exchange rates at the date of the transaction. Foreign exchange gains
and losses from settlement of these transactions, and from translation of
monetary assets and liabilities at the reporting date, exchange rates are
recognised in the Statement of Profit and Loss.
(o) Earnings Per Share:
Basic earnings per share is computed by dividing the net profit for the
period attributable to the equity shareholders of the Group by the weighted
average number of equity shares outstanding during the period. The

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
weighted average number of equity shares outstanding during the period
and for all periods presented is adjusted for events, such as bonus shares,
other than the conversion of potential equity shares that have changed the
number of equity shares outstanding, without a corresponding change in
resources.
For the purpose of calculating diluted earnings per share, the net profit for
the period attributable to equity shareholders and the weighted average
number of shares outstanding during the period is adjusted for the effects
of all dilutive potential equity shares.
(p) Business Combination:
Business combinations are accounted for using the acquisition accounting
method as at the date of the acquisition, which is the date at which
control is transferred to the Group. The consideration transferred in the
acquisition and the identifiable assets acquired and liabilities assumed
are recognised at fair values on their acquisition date. Goodwill is initially
measured at cost, being the excess of the aggregate of the consideration
transferred and the amount recognised for non-controlling interests, and
any previous interest held, over the net identifiable assets acquired and
liabilities assumed. The Group recognises any non-controlling interest
in the acquired entity on an acquisition-by-acquisition basis either at
fair value or at the non-controlling interests proportionate share of the
acquired entitys net identifiable assets. Consideration transferred does
not include amounts related to settlement of pre-existing relationships.
Such amounts are recognised in the Statement of Profit and Loss.
Transaction costs are expensed as incurred, other than those incurred
in relation to the issue of debt or equity securities. Any contingent
consideration payable is measured at fair value at the acquisition date.
Subsequent changes in the fair value of contingent consideration are
recognised in the Statement of Profit and Loss.
In accordance with Ind AS 101 provisions related to first time adoption, the
Group has elected to apply Ind AS accounting for business combinations
prospectively from 1st April, 2015. As such, Previous GAAP balances
relating to business combinations entered into before that date, including
goodwill, have been carried forward as at the date of transition to Ind AS.
(q) Borrowing Costs:
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period of
time to get ready for its intended use or sale are capitalised as part of the
cost of the asset. All other borrowing costs are expensed in the period
in which they occur. Borrowing costs consist of interest and other costs
that an entity incurs in connection with the borrowing of funds. Borrowing
cost also includes exchange differences to the extent regarded as an
adjustment to the borrowing costs.
(r) Operating segments:
The managing committee is considered to be the Chief Operating Decision
Maker (CODM) as defined in IND AS 108. The Operating Segment is the
level at which discrete financial information is available. The CODM
allocates resources and assess performance at this level. The group has
identified the below operating segments:
1. Home Care - Fabric Wash, Household care and Water
2. Personal Care - Personal Wash, Skin Care, Hair Care, Oral
Care, Deodorants and colours
3. Foods - Packaged foods and popular foods
4. Refreshments - Tea, Coffee, Ice Creams and Frozen Deserts.
Overview Reports Financial Statements 153
(All amounts in ` crores, unless otherwise stated)
3 FIRST TIME ADOPTION OF IND AS
The Group has adopted Indian Accounting Standards (Ind AS) as notified by the
Ministry of Corporate Affairs with effect from 1st April, 2016, with a transition
date of 1st April, 2015. These consolidated financial statements for the year
ended 31st March, 2017 are the first the Group has prepared under Ind AS.
For all periods upto and including the year ended 31st March, 2016 , the Group
prepared its financial statements in accordance with the accounting standards
notified under the section 133 of the Companies Act 2013, read together with
paragraph 7 of the Companies (Accounts) Rules, 2014 ('Previous GAAP').
The adoption of Ind AS has been carried out in accordance with Ind AS 101,
First-time Adoption of Indian Accounting Standards. Ind AS 101 requires
that all Ind AS standards and interpretations that are issued and effective
for the first Ind AS financial statements be applied retrospectively and
consistently for all financial years presented. Accordingly, the Group has
prepared financial statements which comply with Ind AS for year ended
31st March, 2017, together with the comparative information as at and for
the year ended 31st March, 2016 and the opening Ind AS Balance Sheet as
at 1st April, 2015, the date of transition to Ind AS.
In preparing these Ind AS consolidated financial statements, the Group has
availed certain exemptions and exceptions in accordance with Ind AS 101,
as explained below. The resulting difference between the carrying values of
the assets and liabilities in the consolidated financial statements as at the
transition date under Ind AS and Previous GAAP have been recognised directly
in equity (retained earnings or another appropriate category of equity). This note
explains the adjustments made by the Group in restating its Previous GAAP
financial statements, including the Balance Sheet as at 1st April, 2015 and the
consolidated financial statements as at and for the year ended 31st March, 2016.
A. Optional Exemptions from retrospective application
Ind AS 101 permits first-time adopters certain exemptions from retrospective
application of certain requirements under Ind AS. The Group has elected to
apply the following optional exemptions from retrospective application:
(a) Business combinations
Ind AS 103 Business Combinations has not been applied to acquisitions of
subsidiaries, or of interests in associates and joint ventures and transactions
which are considered businesses for Ind AS, that occurred before 1st
April, 2015. The carrying amounts of assets and liabilities in accordance
with Previous GAAP are considered as their deemed cost at the date of
acquisition. After the date of the acquisition, measurement is in accordance
with Ind AS. The carrying amount of goodwill in the opening Ind AS Balance
Sheet is its carrying amount in accordance with the Previous GAAP.
(b) Deemed cost for property, plant and equipment and intangible
assets
The Group has elected to measure all its property, plant and equipment
and intangible assets at the Previous GAAP carrying amount as its deemed
cost on the date of transition to Ind AS.
(c) Share-based payments
The Group has elected not to apply Ind AS 102 Share-Based Payment, to
equity instruments that vested prior to the date of transition to Ind AS.
(d) Joint arrangements
The Group has elected to measure the investment in the joint venture in
Kimberly Clark Lever Private Limited in the consolidated financial statements
at the deemed cost of the investment at the date of transition to Ind AS.
Accordingly, the investment has been measured at the aggregate of the carrying
amounts of the assets and liabilities that had been previously proportionately
consolidated under the Previous GAAP for year ended 31st March, 2015.
Annual Report 2016-17 Hindustan Unilever Limited
154 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
B. Mandatory Exceptions to retrospective application
The Group has applied the following exceptions to the retrospective
application of Ind AS as mandatorily required under Ind AS 101:
(All amounts in ` crores, unless otherwise stated)
date of transition to Ind AS and will apply the requirements of Ind AS
110, 'Consolidated Financial Statements' applicable to non-controlling
interests prospectively from the date of transition to Ind AS.

(a) Estimates C. Transition to Ind AS - Reconciliations

On assessment of the estimates made under the Previous GAAP financial
statements, the Group has concluded that there is no necessity to revise
the estimates under Ind AS, as there is no objective evidence that those
estimates were in error. However, estimates that were required under Ind
AS but not required under Previous GAAP are made by the Group for the
relevant reporting dates reflecting conditions existing as at that date.
(b) Classification and measurement of financial assets
The classification of financial assets to be measured at amortised
cost or fair value through other comprehensive income is made on
the basis of the facts and circumstances that existed on the date of
transition to Ind AS.
(c) Non-controlling interests
The Group has carried the carrying amount of non-controlling interests
recognised under Previous GAAP for Unilever Nepal Limited as at the
The following reconciliations provide the explanations and quantification of
the differences arising from the transition from Previous GAAP to Ind AS in
accordance with Ind AS 101:
I. Reconciliation of Equity as at 1st April, 2015
II. A. Reconciliation of Equity as at 31st March, 2016
B. Reconciliation of Statement of Profit and Loss for the year ended
31st March, 2016
III. Adjustments to Statement of Cash Flows for the year ended 31st
March, 2016
Previous GAAP figures have been reclassified/regrouped wherever necessary
to conform with Consolidated financial statements prepared under Ind AS.

I. Reconciliation of Equity as at 1st April, 2015

Ind AS adjustments
Previous
Note Joint HUVF/ Ind AS
GAAP Others
venture BACN
ASSETS
Non-current assets
Property, plant and equipment (b), (o) 2,718 (38) - (4) 2,676
Capital work-in-progress (b) 516 (5) - - 511
Goodwill on consolidation 81 - - - 81
Other intangible assets 22 - - - 22
Investment in joint venture under equity method (b) - 20 - - 20
Financial assets
Investments (a),(p), (q) 356 - (0) (350) 6

Other financial assets (b), (n) 134 (13) - (1) 120

Non-current tax assets (net) (b) 367 (4) - - 363
Deferred tax assets (net) (h) 201 - - (44) 157
Other non-current assets (b), (n), (o) 69 (24) - 5 50
Current assets
Inventories (b) 2,848 (32) - - 2,816
Financial assets
Investments (b), (c) 2,679 (0) - 94 2,773

Trade receivables (b) 1,010 (3) - - 1,007

Cash and cash equivalents (b), (c), (p), (q) 809 (9) 4 1 805

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 155

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

Ind AS adjustments
Previous
Note Joint HUVF/ Ind AS
GAAP Others
venture BACN

Bank balances other than cash and cash equivalents above 1,881 - - - 1,881

Other financial assets (b), (d), (q) 268 17 0 10 295

Other current assets (b), (p) 444 (5) 0 - 439
Assets held for sale (b) 10 (1) - - 9
TOTAL ASSETS 14,413 (97) 4 (289) 14,031
EQUITY AND LIABILITIES
Equity
Equity share capital 216 - - - 216
Other Equity (a), (b), (c), (d), 3,813 - 2 2,423 6238
(e), (f), (g), (h),
(m), (n), (p), (q)
Non-controlling interests 19 - - - 19

Liabilities
Non-current liabilities
Financial liabilities
Borrowings (b) 7 (7) - - -

Other financial liabilities 20 - - - 20

Provisions (a), (m) 864 - - (346) 518
Non-current tax liabilities (net) 230 - - - 230
Deferred tax liabilities (net) (b) - - - - -
Other non-current liabilities (f) 153 - - (19) 134
Current liabilities
Financial liabilities
Borrowings (b) 36 (36) - - -

Trade payables - - - - -

Dues to Micro and Small Enterprises - - - - -

Dues to Others (b) 5,479 (38) - - 5,441

Other financial liabilities (b), (d), (p), (q) 226 (9) 2 4 223
Other current liabilities (b), (p), (q) 768 (6) - - 762
Provisions (a), (b), (e), (n) 2,582 (1) - (2,351) 230
TOTAL EQUITY AND LIABILITIES 14,413 (97) 4 (289) 14,031

Annual Report 2016-17 Hindustan Unilever Limited

156 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
II. A. Reconciliation of Equity as at 31st March, 2016

Ind AS adjustments Ind AS

Previous
Note Joint
GAAP HUVF/BACN Others
venture
ASSETS
Non-current assets
Property, plant and equipment (b), (o), (p) 3,207 (38) 0 (4) 3,165
Capital work-in-progress (b) 427 (19) - - 408
Goodwill on consolidation 81 - - - 81
Other intangible assets 12 - - - 12
Investment in joint venture under equity method (b) - 26 - - 26
Financial assets
Investments (a), (p), (q) 356 - (0) (350) 6
Other financial assets (n) 148 - - (1) 147
Non-current tax assets (net) (b) 385 (4) - - 381
Deferred tax assets (net) (h) 233 - - (65) 168
Other non-current assets (n), (o) 50 - - 5 55
Current assets
Inventories (b) 2,753 (27) - - 2,726
Financial assets
Investments (c) 2,397 - - 163 2,560
Trade receivables (b) 1,269 (5) - - 1,264
Cash and cash equivalents (b), (q) 850 (21) 1 - 830
Bank balances other than cash and cash equivalents above 2,179 - - - 2,179
Other financial assets (b), (d) 222 1 - 16 239
Other current assets (b) 557 (32) - - 525
Assets held for sale 22 - - - 22
TOTAL 15,148 (119) 1 (236) 14,794
EQUITY AND LIABILITIES
Equity
Equity share capital 216 - - - 216
Other Equity (a), (b), (c), (d), 3,758 - (1) 2,600 6,357
(e), (f), (g), (h),
(l), (m), (n), (p),
(q)
Non-controlling interests 20 - - - 20
Liabilities
Non-current liabilities
Financial liabilities
Borrowings (b) 42 (42) - - -
Other financial liabilities 20 - - - 20
Provisions (a), (l), (m) 967 - - (344) 623
Non-current tax liabilities (net) 306 - - - 306
Deferred tax liabilities (net) (b), (h) 0 0 - 1 1
Other non-current liabilities (f) 200 - - (16) 184

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 157

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

Ind AS adjustments Ind AS

Previous
Note Joint
GAAP HUVF/BACN Others
venture
Current liabilities
Financial liabilities
Borrowings (b) 210 (33) - - 177

Trade payables - - - - -
Dues to Micro and Small Enterprises - - - - -
Dues to Others (b) 5,722 (37) - - 5,685
Other financial liabilities (b), (d), (p), (q) 251 (0) 2 5 258
Other current liabilities (b), (p), (q) 661 (7) - - 654
Provisions (a), (e), (n) 2,775 - - (2,482) 293
TOTAL 15,148 (119) 1 (236) 14,794

II. B Reconciliation of Statement of Profit and Loss for the year ended 31st March, 2016

Ind AS adjustments Ind AS

Previous
Note Joint HUVF/
GAAP Others
venture BACN
INCOME
Revenue from operations (b), (i), (j), (p), (q) 33,093 14 5 1,504 34,616

Other income (a), (b), (c), (d), 378 (25) - 70 423

(k), (n)
TOTAL INCOME 33,471 (11) 5 1,574 35,039
EXPENSES
Cost of materials consumed (b) 11,905 (93) - - 11,812

Purchases of stock-in-trade (b) 3,797 175 - - 3,972


Changes in inventories of finished goods (including (b) 86 (3) - - 83
stock-in-trade) and work-in-progress
Excise duty on sale of goods (i) - - - 2,430 2,430

Employee benefits expenses (a), (b), (f), (g), 1,738 (41) 2 (19) 1,680
(m)
Finance costs (a), (b),(f), (m) 5 (3) - 15 17

Depreciation and amortisation expense (b), (o), (p) 357 (4) 0 (0) 353

Other expenses (b), (d), (j), (n), 9,592 (52) 5 (926) 8,619
(o), (p), (q)
TOTAL EXPENSES 27,480 (21) 7 1,500 28,966
Share of net loss of Joint venture accounted for (9) (9)
using equity method
Profit before exceptional items and tax 5,991 1 (2) 74 6,064

Exceptional items (b), (l), (m) (41) 2 8 (31)

Profit before tax 5,950 3 (2) 82 6,033

Annual Report 2016-17 Hindustan Unilever Limited

158 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

Ind AS adjustments Ind AS

Previous
Note Joint HUVF/
GAAP Others
venture BACN
Tax expenses
Current tax (k) (1,887) - - 8 (1,879)

Deferred tax credit/(charge) (b), (h) 35 (0) - (31) 4

PROFIT FOR THE YEAR (A) 4,098 3 (2) 59 4,158

Profit/(Loss) from discontinued operations before tax (2) - - (4) (6)
Tax expenses of discontinued operations (2) - - 1 (0)
Profit/(Loss) from discontinued operations after tax (B) (4) - - (3) (7)

Profit for the year (A+B 4,094 3 (2) 56 4,151

OTHER COMPREHENSIVE INCOME

Items that will not be reclassified to profit or loss
Remeasurement gain/(loss) on net defined benefit (a), (m) - - - (16) (16)
plans

Income tax relating to items that will not be
reclassified to profit or loss
Remeasurement gain/(loss) on net defined benefit plans (h) - - - 5 5

Items that will be reclassified to profit or loss


Fair value of debt instruments through other com- (c) - - - (2) (2)
prehensive income

Income tax relating to items that will be
reclassified to profit or loss

Fair value of Debt instruments through other com- (h) - - - 1 1
prehensive income
OTHER COMPREHENSIVE INCOME FOR THE YEAR (B) - - - (12) (12)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR (A+B) 4,094 3 (2) 44 4,139
Profit attributable to:
Non-controlling interests 12 12

Owners of the parent 4,082 3 (2) 56 4,139

4,094 3 (2) 56 4,151
Total comprehensive income attributable to:
Non-controlling interests 12 0 12

Owners of the parent 4,082 44 4,127

4,094 3 (2) 44 4,139

III. Adjustments to Statement of Cash Flow

There were no material differences between the Statement of Cash Flows presented under Ind AS and the Previous GAAP.

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 159

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
NOTES TO RECONCILIATIONS
(a) Investment in Controlled Trust
Under Previous GAAP, the investment in the Hindustan Unilever Limited Securitisation of Retirement Benefit Trust ('HURB Trust') did not qualify as
plan asset under AS 15 and has been consolidated as a wholly controlled trust in the Group financial statements and the investments in the trust
have been reflected as a non current investment . Under Ind AS, the HURB Trust qualifies as a plan asset and hence has not been consolidated as
this is excluded under Ind A S 110 and the previously consolidated assets and liabilities have no longer been aggregated at the date of transition to
Ind AS. Additionally, given that the investment is a plan asset for the Group, The plan asset has been fair valued as per actuarial valuation carried
in accordance with Ind AS on date of transition to Ind AS and as at each balance sheet date. The plan asset recognised has been netted off against
provision for employee benefits. The interest income and remeasurement gain/(loss) on the recognised plan asset has been recognised in Statement
of Profit and Loss and Other Comprehensive Income respectively.

Debit / (Credit) Debit / (Credit)

Statement of
Balance Sheet
profit and loss

As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016

(Profit)/Loss:
Other income - - 24
Employee Benefit Expenses - - (28)
Other expenses - - (0)

Debit / (Credit) Debit / (Credit)

Statement of
Balance Sheet
profit and loss
As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016
The following items of Assets & Liabilities were previously
proportionately consolidated under previous GAAP.
Asset:
Investments (Non-current) (350) (350) -
Liability:
Provisions (Non-current) 346 338 -
Provisions (Current) 7 8 -
Equity:
Other equity (Retained earnings) (3) 4 -
(Profit)/Loss:
Finance cost - - (5)
Remeasurement gain/(loss) on net defined benefit plans - - 13

Annual Report 2016-17 Hindustan Unilever Limited

160 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
(b) Investment in Kimberly Clark Lever Private Limited
Under Previous GAAP, the investment in the joint venture in Kimberly Clark Lever Private Limited was proportionately consolidated along with the
consolidated assets and liabilities. Under Ind AS , the investment in KCLL will be measured using the equity method . The f ollowing previously
proportionately consolidated assets and liabilities and items of Income and expenditure under Previous GAAP have been aggregated into a single line
investment balance in the joint venture at the date of transition to Ind AS.

Debit / (Credit) Debit / (Credit)

Statement of
Balance Sheet
profit and loss
As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016
The following items of assets and liabilities were previously
proportionately consolidated under Previous GAAP.
ASSETS
Property, plant and equipment (38) (38) -
Capital work-in-progress (5) (19) -
Non Current investments 36 51 -
Financial assets - non-current (13) - -
Non financial assets - non-current (24) - -
Non-current tax assets (net) (4) (4) -
Inventories (32) (27) -
Current investments (0) - -
Trade receivables (3) (5) -
Financial assets - current 17 1 -
Cash and cash equivalents (9) (21) -
Non financial assets - current (5) (32) -
Non-current assets classified as held for sale (1) - -
(81) (94)
EQUITY AND LIABILITIES
Equity Share capital - 36 -
Other Equity (16) (61) -
Borrowings - Non Current 7 42 -
Deferred tax liabilities (Net) - 0 -
Borrowings - Current 36 33 -
Trade payables 38 37 -
Financial liabilities - current 9 0 -
Non financial liabilities - current 6 7 -
Short-term provisions 1 - -
81 94
The following items of income and expenditure were previously
proportionately consolidated under Previous GAAP.
Revenue from operations - - (14)
Other income - - 1
Cost of materials consumed - - (93)
Purchases of stock-in-trade - - 175

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 161

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

Debit / (Credit) Debit / (Credit)

Statement of
Balance Sheet
profit and loss
As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016
Changes in inventories of finished goods (including stock-in-trade) - - (3)
and work-in-progress

Employee benefits expenses - - (13)

Finance costs - - (3)
Depreciation and amortisation expense - - (4)
Other expenses - - (52)
Exceptional items - - 2
Deferred tax credit/(charge) - - (0)
Impact of Equity Accounting of KCLL under Ind AS .
Other equity 16 25 -
Non-current investments (16) (25) -

(c) Current Investments

a. Investments in treasury bills and government securities - Under Previous GAAP, the investments in treasury bills a nd government securities are
measured at cost or market value, whichever is lower. Under Ind AS, the Group has designated these investments as fair value through other
comprehensive income (FVOCI). Accordingly, these investments are required to be measured at fair value. At the date of transition to Ind AS,
difference between the instruments fair value and Previous GAAP carrying amount has been recognised in Other Equity (Retained earnings for
interest income component and Debt instruments through Other Comprehensive Income for fair value change). Interest income and fair value
changes are recognised in the Statement of Profit and Loss and Other Comprehensive Income respectively for the year ended 31st March, 2016.
b. Mutual funds - Under Previous GAAP, the mutual funds are measured at cost or market value, whichever is lower. Under Ind AS, the Group has
designated these investments at fair value through profit or loss (FVTPL). Accordingly, these investments are required to be measured at fair value.
At the date of transition to Ind AS, difference between the fair value of the instruments and its Previous GAAP carrying amount has been recognised
in retained earnings. Fair value changes are recognised in the Statement of Profit and Loss for the year ended 31st March, 2016.

Debit / (Credit) Debit / (Credit)

Statement of
Balance Sheet
profit and loss
As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016
Asset:
Investments (Current) 94 163 -
Investments (Non - Current) - - -
Cash and cash equivalents 1 - -
Equity:
Other equity (Retained earnings) (93) (163) -
Other equity (Debt instruments through Other Comprehensive Income) (2) (0) -
(Profit)/Loss:
Other income - - (70)
Gain/(loss) on debt instruments through other comprehensive income - - 2

Annual Report 2016-17 Hindustan Unilever Limited

162 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
(d) Derivative Instruments - Foreign Exchange Forward Contracts
Under Previous GAAP, unrealised net loss on foreign exchange forward contracts, if any, as at each Balance Sheet date is provided for. Under Ind AS,
foreign exchange forward contracts are mark-to-market as at each Balance Sheet date and unrealised net gain or loss is recognised. Derivative assets
and derivative liabilities are presented on gross basis.

Debit / (Credit) Debit / (Credit)

Statement of
Balance Sheet
profit and loss

As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016

Asset:
Other financial assets (Current) 10 16 -
Liability:
Other financial liabilities (Current) (4) (5) -
Equity:
Other equity (Retained earnings) (6) (11)
(Profit)/Loss:
Other income - - (7)
Other expenses - - (0)

(e) Proposed Dividend

Under Previous GAAP, proposed dividends and related the dividend distribution tax are recognised as a provision in the year to which they relate,
irrespective of when they are declared. Under Ind AS, dividends and related dividend distribution tax are recognised as a liability in the year in which
it is approved by the shareholders in the Annual General Meeting of the Company.

Debit / (Credit) Debit / (Credit)

Statement of
Balance Sheet
profit and loss

As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016

Equity:
Other equity (Retained earnings) (2,344) (2,474) -
Liability:
Provisions (Current) 2,344 2,474 -

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 163

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
(f) Other Non-Current Liabilities
Under Previous GAAP, non-current liabilities are recognised on undiscounted basis. Ind AS requires such liabilities to be recognised at present value
(discounted value) where the effect of time value of money is material. This led to a decrease in the value of non-current liabilities on the date of
transition which was adjusted against retained earnings. Ind AS also provides that where discounting is used, the carrying amount of the liability
increases in each period to reflect the passage of time. This increase is recognised as finance cost. The interest cost on unwinding of discount
and impact of change in discount rate are recognised in the Statement of Profit and Loss under 'Finance costs' and 'Employee benefit expenses'
respectively for the year ended 31st March, 2016.

Debit / (Credit) Debit / (Credit)

Statement of
Balance Sheet
profit and loss

As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016

Equity:
Other equity (Retained earnings) (19) (16) -
Liability:
Other non-current liabilities 19 16 -
(Profit)/Loss:
Employee benefits expenses - - 0
Finance costs - - 2

(g) Employee Stock Option Plan

Under Previous GAAP, the intrinsic value of the employee stock option plan is recognised as an expense over the vesting period. Under Ind AS,
the compensation cost of employee stock option plan is recognised based on the fair value of the options determined using an appropriate pricing
model at the date of grant. The reduction in employee compensation cost for the unvested options as on the date of transition based on fair value
method has been adjusted against retained earnings. The impact for the year ended 31st March, 2016 has been recognised in 'Employee benefits
expenses' in the Statement of Profit and Loss.

Debit / (Credit) Debit / (Credit)

Statement of
Balance Sheet
profit and loss

As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016

Equity:
Other equity (Securities Premium Reserve) - 1 -
Other equity (Employee Stock Options Outstanding Account) 2 1 -
Other equity (Retained earnings) (2) (2) -
(Profit)/Loss:

Annual Report 2016-17 Hindustan Unilever Limited

164 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

Employee benefits expenses - - (0)

(h) Deferred Taxes

Under Previous GAAP, deferred taxes were recognised for the tax effect of timing differences between accounting profit and taxable profit for the
year using the income statement approach. Under Ind AS, deferred taxes are recognised using the balance sheet for future tax consequences of
temporary differences between the carrying value of assets and liabilities and their respective tax bases. The above difference, together with the
consequential tax impact of the other Ind AS transitional adjustments lead to temporary differences. Deferred tax adjustments are recognised in
correlation to the underlying transaction either in retained earnings or through other comprehensive income.

Debit / (Credit) Debit / (Credit)

Statement of
Balance Sheet
profit and loss

As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016

Asset:
Deferred tax assets (net) (44) (65) -
Liability:
Deferred tax liabilities (net) - (1) -
Equity:
Other equity (Retained earnings) 43 66 -
Other equity (Debt instruments through Other Comprehensive Income) 1 0 -
(Profit)/Loss:

Deferred tax credit/(charge) - - 31

Income tax relating to
Remeasurement gain/(loss) on net defined benefit plans - - (5)
Gain/(loss) on debt instruments through other comprehensive income - - (1)

(i) Excise Duty

Under Previous GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Excise duty
on sale of goods is separately presented on the face of Statement of Profit and Loss. Thus, sale of goods under Ind AS has increased with a
corresponding increase in expenses.

Debit / (Credit) Debit / (Credit)

Statement of
Balance Sheet
profit and loss

As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016

(Profit)/Loss:
Revenue from operations - - (2,430)
Excise duty on sale of goods - - 2,430

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 165

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
(j) Revenue from Sale of Goods
Under Previous GAAP, revenue is recognised net of trade discounts, rebates, sales taxes and excise duties. Under Ind AS, revenue is recognised
at the fair value of the consideration received or receivable, after the deduction of any trade discounts, volume rebates and any taxes or duties
collected on behalf of the government such as sales tax and value added tax except excise duty. Discounts given include rebates, price reductions
and incentives given to customers, promotional couponing and trade communication costs which have been reclassified from 'Advertising and sales
promotion' within other expenses under Previous GAAP and netted from revenue under Ind AS.

Debit / (Credit) Debit / (Credit)

Statement of
Balance Sheet
profit and loss

As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016

(Profit)/Loss:
Revenue from operations - - 926
Other expenses - - (926)

(k) Interest on Income Tax Refund

Under Previous GAAP, the interest on income tax refund is recognised as 'Other income'. Under Ind AS, the Group has adopted the accounting policy
to recognise interest income/expense related to income tax as part of income tax expense. Accordingly, the interest on income tax refund has been
reclassified from 'Other income' to 'Tax expenses - Current tax' for the year ended 31st March, 2016.

Debit / (Credit) Debit / (Credit)

Statement of
Balance Sheet
profit and loss

As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016

(Profit)/Loss:
Other income - - 8
Tax expenses - Current tax - - (8)

(l) Non-Current Provisions

Under Previous GAAP, non-current provisions are recognised on undiscounted basis. Ind AS requires such provisions to be recognised at present
value (discounted value) where the effect of time value of money is material. This led to a decrease in the value of non-current provisions for the year
ended 31st March,2016 which was recognised in 'Exceptional items' in the Statement of Profit and Loss where the underlying provision was initially
recognised. Subsequently, the present value is increased to reflect passage of time by recognising finance cost

Debit / (Credit) Debit / (Credit)

Statement of
Balance Sheet
profit and loss

As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016

Equity:

Other equity (Retained earnings) - (6) -

Liability:
Provisions (Non-current) - 6 -
(Profit)/Loss:
Exceptional items - - (5)

Annual Report 2016-17 Hindustan Unilever Limited

166 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
(m) Defined Benefit Plans
a. Actuarial gain/(loss) - Under Previous GAAP, the actuarial gain/(loss) of defined benefit plans has been recognised in Statement of Profit and Loss as an
exceptional item. Under Ind AS, the remeasurement gain/(loss) on net defined benefit plans is recognised in Other Comprehensive Income net of tax.
b. Net interest cost on defined benefit plans - Under Previous GAAP, the interest cost on defined benefit liability and expected return on plan
assets is recognised as employee benefit expenses in the Statement of Profit and Loss. Under Ind AS, the Group has adopted the accounting
policy to recognise the net interest cost on defined benefit plans as finance cost.

Debit / (Credit) Debit / (Credit)

Statement of
Balance Sheet
profit and loss
As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016
Equity:
Other equity (Retained earnings) (0) (0)
Liability:
Provisions (Non-current) 0 0
(Profit)/Loss:
Employee benefits expenses - - (19)
Finance costs - - 18
Exceptional items - - (3)
Remeasurement gain/(loss) on net defined benefit plans - - 3

(n) Discounting of security deposits for leases

Under Previous GAAP, the security deposits for leases are accounted at an undiscounted value. Under Ind AS, the security deposits for leases have
been recognised at discounted value and the difference between undiscounted and discounted value has been recognised as Deferred lease rent
which has been amortised over respective lease term as rent expense under other expenses. The discounted value of the security deposits is
increased over the period of lease term by recognising the notional interest income under other income.
Under Previous GAAP, lease payments are required to be recognised on a straight-line basis over the term of the lease. Under Ind AS, lease payments
which are structured to increase in line with expected general inflation to compensate for the lessors expected inflationary cost increases, are
required to be recognised as an expense in line with its contractual term. Accordingly, the provision for scheduled increases on operating lease
recognised under Previous GAAP has been written back under Ind AS.

Debit / (Credit) Debit / (Credit)

Statement of
Balance Sheet
profit and loss

As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016

Asset:
Other financial assets (Non-current) (1) (1) -
Other non-current assets 1 1 -
Equity:
Other equity (Retained earnings) (0) (0) -
Liability:
Provisions (Current) 0 0 -
(Profit)/Loss:
Other income - - (1)
Other expenses - - 0

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 167

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
(o) Reclassification of JPPL leasehold land
Under Previous GAAP, All leasehold lands are classified as property, plant and equipment.. Under Ind AS, leasehold land is to be recognised as an
Operating or a Finance lease as per the definition and classification criteria under Ind AS 17. Accordingly deemed cost of the leasehold land for
JPPL to be reclassified from property plant and equipment and to be disclosed as operating leases prepayments under "current assets " and "non-
current assets" to be amortised annually.

Debit / (Credit) Debit / (Credit)

Statement of
Balance Sheet
profit and loss

As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016

Asset:
Property Plant and Equipment (4) (4) -
Other non-current assets 4 4 -
(Profit)/Loss:
Depreciation and amortisation expenses - - (0)
Other expenses - - 0

(p) Investments measured in Hindustan Unilever Foundation(HUVF)

Non profit entity are not consolidated as per previous GAAP as economic benefit does not flow to the group. Under Ind As 110(Consolidated financial
statements) such non profit entities are not exempt from consolidation

Debit / (Credit) Debit / (Credit)

Statement of
Balance Sheet
profit and loss

As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016

Asset:
Property Plant and Equipment 0
Investments (Non-current) (0) (0)
Cash and cash equivalents 1
Other current assets 0
Equity:
Other Equity (Retained earnings) (1) 1
Liability:
Other financial Liability (Current) (0) (1)
Other current liabilities (0) (0)
(Profit)/Loss:
Revenue from operations (8)
Employee benefits expenses 2
Depreciation and amortisation expense 0
Other expenses 8

Annual Report 2016-17 Hindustan Unilever Limited

168 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

(q) Investment in Bhavishya Alliance Child Nutrition Initiatives(BACN)

Non profit entity are not consolidated as per previous I-GAAP as economic benefit does not flow to the group. Under Ind As 110(Consolidated
financial statements) such non profit entities are not exempt from consolidation.

Debit / (Credit) Debit / (Credit)

Statement of
Balance Sheet
profit and loss

As at As at Year ended
1st April, 2015 31st March, 2016 31st March, 2016

Asset:
Investments (Non-current) (0) (0)
Cash and cash equivalents 3 1
Other financial assets (Current) 0 -
Equity:
Other Equity (Retained earnings) (1) 0
Liability:
Other financial Liability (Current) (2) (1)
Other current liabilities (0) (0)
(Profit)/Loss:
Revenue from operations (5)
Other expenses 5

4 PROPERTY, PLANT AND EQUIPMENT

Refer Note 2.4 (a) for accounting policy on Property, Plant and Equipment.
Refer Note 2.4 (k) for accounting policy on Impairment of Non Financial Asset.
A PROPERTY, PLANT AND EQUIPMENT

Land Plant and Furniture Office

Buildings Vehicles Total
- Freehold - Leasehold equipment and fixtures equipment

Gross Block
Balance as at 1st April, 2015 (Deemed Cost) 61 28 851 1,660 54 - 22 2,676
Additions - 1 107 756 8 - 26 898
Disposals (1) (1) (27) (46) (1) - (7) (83)
Balance as at 31st March, 2016 60 28 931 2,370 61 - 41 3,491
Additions - 1 284 934 7 - 22 1,248
Disposals - - (5) (34) (2) - (1) (42)
Balance as at 31st March, 2017 60 29 1,210 3,270 66 - 62 4,697
Accumulated Depreciation
Balance as at 1st April, 2015 - - - - - - - -
Additions - 2 36 284 9 - 11 342
Disposals - - - (12) (1) - (3) (16)
Balance as at 31st March, 2016 - 2 36 272 8 - 8 326

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 169

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

Land Plant and Furniture Office

Buildings Vehicles Total
- Freehold - Leasehold equipment and fixtures equipment

Additions - 2 40 356 9 - 13 420

Disposals - - (1) (14) (1) - (1) (17)
Impairment Loss - - - 0 0 - 0 0
Balance as at 31st March, 2017 - 4 75 614 16 - 20 729
Net Block
Balance as at 1st April, 2015 61 28 851 1,660 54 - 22 2,676
Balance as at 31st March, 2016 60 26 895 2,098 53 - 33 3,165
Balance as at 31st March, 2017 60 25 1,135 2,656 50 - 42 3,968

The Group has elected to measure all its property, plant and equipment at the previous GAAP carrying amount i.e. 31st March 2015 as its deemed cost
(Gross Block Value) on the date of transition to Ind AS i.e. 1st April 2015. The movement in carrying value of property, plant and equipment as per IGAAP
is mentioned below:
Land Plant and Furniture Office
Buildings Vehicles Total
- Freehold - Leasehold equipment and fixtures equipment

Gross Block
Balance as at 1st April, 2015 (IGAAP) 61 36 1,173 3,481 108 1 106 4,966
Additions - 1 107 756 8 - 26 898
Disposals (1) (1) (29) (150) (1) - (11) (193)
Balance as at 31st March, 2016 60 36 1,251 4,087 115 1 121 5,671
Additions - 1 284 934 7 - 22 1,248
Disposals - - (7) (99) (6) - (6) (118)
Balance as at 31st March, 2017 60 37 1,528 4,922 116 1 137 6,801
Accumulated Depreciation
Balance as at 1st April, 2015 - 8 322 1,821 54 1 84 2,290
Additions - 2 36 284 9 - 11 342
Disposals - - (2) (116) (1) - (7) (126)
Balance as at 31st March, 2016 - 10 356 1,989 62 1 88 2,506
Additions - 2 40 356 9 - 13 420
Disposals - - (4) (78) (5) - (6) (93)
Impairment Loss - - - 0 0 - 0 0
Balance as at 31st March, 2017 - 12 392 2,267 66 1 95 2,833
Net Block
Balance as at 1st April, 2015 61 28 851 1,660 54 - 22 2,676
Balance as at 31st March, 2016 60 26 895 2,098 53 - 33 3,165
Balance as at 31st March, 2017 60 25 1,136 2,655 50 - 42 3,968

Annual Report 2016-17 Hindustan Unilever Limited

170 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
NOTES:
(a) Buildings include ` 0 crores (31st March, 2016: ` 0 crores and 1st April, 2015: ` 0 crores) being the value of shares in co-operative housing
societies.
(b) The title deeds of Freehold Land aggregating ` 2 crores (31st March, 2016: ` 2 crores and 1st April, 2015: ` 2 crores), Leasehold Land, net block
aggregating ` 5 crores, (31st March, 2016: ` 5 crores and 1st April, 2015: ` 5 crores) are in the process of perfection of title.
(c) The Property, Plant and Equipment in 4A includes assets given on lease mentioned in the below table:

Building Plant & Furniture Office Total

equipment & fixtures equipment
Gross Block(Deemed cost) as at 1st April, 2015 0 60 0 0 60
Accumulated Dep. as at 1st April, 2015 - - - - -
Net Block as at 1st April, 2015 0 60 0 0 60
Gross Block as at 31st March, 2016 1 62 0 0 63
Accumulated Dep. as at 31st March, 2016 (0) (2) - (0) (2)
Net Block as at 31st March, 2016 1 60 0 0 61
Gross Block as at 31st March, 2017 0 55 0 (0) 55
Accumulated Dep. as at 31st March, 2017 (0) (4) (0) 0 (4)
Net Block as at 31st March, 2017 0 51 0 0 51
B CAPITAL WORK-IN-PROGRESS
Capital work in progress as at 31st March 2017 is ` 229 crores (31st March 2016: ` 408 crores and 1st April, 2015: ` 511 crores)
For contractual commitment with respect to property, plant and equipment refer Note 26B.

5 INTANGIBLE ASSETS
Refer Note 2.4 (b) for accounting policy on Intangible Assets.

Other intangible assets

A Intangible Assets Goodwill
Brands Knowhow and Design Computer Software Total
Gross Block
Balance as at 1st April, 2015 (Deemed Cost) - 4 - 18 22
Additions - - - 1 1
Disposals - - - - -
Balance as at 31st March, 2016 - 4 - 19 23
Additions - - - 1 1
Disposals - - - (1) (1)
Acquisitions through business combination (Refer note 46) 0 311 59 - 370
Balance as at 31st March, 2017 0 315 59 19 393
Accumulated Amortisation and Impairment
Balance as at 1st April, 2015 - - - - -
Additions - 4 - 7 11
Disposals - - - (0) (0)
Balance as at 31st March, 2016 - 4 - 7 11
Additions - - 6 6 12
Disposals - - - (0) (0)
Balance as at 31st March, 2017 - 4 6 13 23
Net Block
Balance as at 1st April, 2015 - 4 - 18 22
Balance as at 31st March, 2016 - - - 12 12
Balance as at 31st March, 2017 0 311 53 6 370

The Company has elected to measure all its intangibles at the previous GAAP carrying amount i.e. 31st March 2015 as its deemed cost (Gross Block
Value) on the date of transition to Ind AS i.e. 1st April 2015. The movement in carrying value of intangible asset as per IGAAP is mentioned below:

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 171

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

Other intangible assets

Goodwill
Brands Knowhow and Design Computer Software Total
Gross Block
Balance as at 1st April, 2015 (IGAAP) 12 160 - 141 301
Additions - - - 1 1
Disposals - - - (0) (0)
Balance as at 31st March, 2016 12 160 - 142 302
Additions - - - 1 1
Disposals - - - (1) (1)
Acquisitions through business combination (Refer note 46) 0 311 59 - 370
Balance as at 31st March, 2017 12 471 59 142 672
Accumulated Amortisation and Impairment
Balance as at 1st April, 2015 12 156 - 123 279
Additions - 4 - 7 11
Disposals - - - (0) (0)
Balance as at 31st March, 2016 12 160 - 130 290
Additions - - 6 6 12
Disposals - - - (0) (0)
Balance as at 31st March, 2017 12 160 6 136 302
Net Block
Balance as at 1st April, 2015 - 4 - 18 22
Balance as at 31st March, 2016 - - - 12 12
Balance as at 31st March, 2017 0 311 53 6 370

IMPAIRMENT CHARGES
The goodwill and indefinite life intangible assets are tested for impairment and accordingly no impairment charges were identified for FY 2016-17 (Nil
for FY 2015-16)

SIGNIFICANT CASH GENERATING UNITS (CGUs)

The Company has identified its reportable segments Home care, Personal Care, Foods, Refreshments and Others as the CGUs. The goodwill and brand
(with indefinite life) acquired through business combination has been entirely allocated to CGU Personal Care segment of the Company. The carrying
amount of goodwill and brand as at 31st March, 2017 is ` 0 crores and ` 311 crores respectively.
Following key assumptions were considered while performing Impairment testing

Long term sustainable growth rates 7%

Weighted Average Cost of Capital % (WACC) before tax 13%
Average segmental margins 24%

The projections cover a period of five years, as we believe this to be the most appropriate timescale over which to review and consider annual performances
before applying a fixed terminal value multiple to the final year cash flows. The growth rates used to estimate future performance are based on the
conservative estimates from past performance. Segmental margins are based on FY 2016-17 performance.
Weighted Average Cost of Capital % (WACC) = Risk free return + ( Market risk premium x Beta variant for the Company)
We have performed sensitivity analysis around the base assumptions and have concluded that no reasonable changes in key assumptions would cause
the recoverable amount of the CGU to be less than the carrying value.

B Goodwill on consolidation
Pursuant to the merger of Aquagel Chemicals Private Limited(ACPL) with Lakme Lever Private Limited in the FY 14-15, the excess of cost to the Group of
its investment in ACPL over the groups portion of equity in ACPL, amounting to ` 81 crores has been treated as Goodwill on consolidation. The goodwill
on consolidation is tested for impairment and accordingly no impairments charges were identified for FY 2016-17 (Nil for FY 2015-16)

Annual Report 2016-17 Hindustan Unilever Limited

172 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
6 Investments in subsidiaries, associates and joint venture
As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Unquoted
4,51,69,778 equity shares [31st March, 2016: 4,51,69,778 and 1st - 26 20
April, 2015: 4,23,46,667] of ` 10 each held in Kimberly Clark Lever
Private Limited [Classified as asset held for sale during the year]
Total - 26 20
Aggregate amount of unquoted investments - 26 20

INFORMATION ABOUT JOINT VENTURE

Proportion (%) of equity interest
Name of the Company Country of Principal activities As at As at As at
incorporation 31st March, 2017 31st March, 2016 1st April, 2015
Joint venture
Kimberly Clark Lever Private Limited India FMCG business (infant care 50 50 50
and feminine care products)

The Companys interest in this Joint Venture is reported as asset held for sale and is stated at lower of cost or fair value. The Companys share of each of
the assets, liabilities, income, expenses, etc. (each without elimination of the effect of transactions between the Company and the Joint Venture) related
to its interest in this joint venture, based on the audited financial statements are:

As at As at As at
A Balance sheet 31st March, 2017 31st March, 2016 1st April, 2015
Non-current assets 244 220 168
Current assets 85 113 106
Non-current liabilities (107) (98) (21)
Current liabilities (195) (184) (214)
Cash and cash equivalents included in current assets above 1 43 18
Non-current financial liabilities (excluding trade and other payables and provisions) 91 84 14
included in non-current liabilities above
Current financial liabilities (excluding trade and other payables and provisions) in- 78 68 92
cluded in current liabilities above

Year ended Year ended

31st March, 31st March,
B Statement of Profit and Loss 2017 2016
Revenue from operations 333 349
Loss for the year (23) (19)
Other comprehensive income for the year (0) 0
Total comprehensive income for the year (23) (19)
Group's share of total comprehensive income (50%) (11) (9)

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 173

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
7 INVESTMENTS
Refer Note 2.4 (f) for accounting policy on Financial Instruments.

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
NON-CURRENT INVESTMENTS
A. Equity instruments
Fair value through profit or loss
Quoted 0 0 0
Unquoted 1 1 1
Total (A) 1 1 1
B. Other instruments
Amortised cost
Unquoted
Investments in debentures and bonds 0 0 0
Investments in National Savings Certificates 0 0 0
Fair value through profit or loss
Unquoted
Investments in preference shares 5 5 5
Total (B) 5 5 5
Total (A+B) 6 6 6
CURRENT INVESTMENTS
C. Other instruments
Fair value through other comprehensive income
Quoted
Investments in treasury bills 1,459 1,264 1,328
Investments in government securities - - 471
Fair value through profit or loss
Unquoted
Investments in mutual funds 2,329 1,296 974
Total (C) 3,788 2,560 2,773
Total (A+B+C) 3,794 2,566 2,779
Aggregate amount of quoted investments 1,459 1,264 1,799
Market value of quoted investments 1,459 1,264 1,799
Aggregate amount of unquoted investments 2,335 1,302 980
Refer note 41 for information about fair value measurement and Note 42 for credit risk and market risk of investments.

Annual Report 2016-17 Hindustan Unilever Limited

174 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
8 OTHER FINANCIAL ASSETS
(Unsecured, considered good unless otherwise stated)
Refer Note 2.4 (f) for accounting policy on Financial Instruments.

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
NON-CURRENT
Investments in term deposits (with remaining maturity of more than 1 0 1
twelve months)
Security deposits 122 115 112
Other assets (includes other receivables etc.) 5 32 7
Total (A) 128 147 120
CURRENT
Current account balances with group companies and joint venture 71 52 37
Derivatives - foreign exchange forward contracts 14 15 10
Other assets (includes other receivables etc.) 246 172 248
Total (B) 331 239 295
Total (A+B) 459 386 415

9 INCOME TAXES
Refer Note 2.4 (l) for accounting policy on Income Taxes.

A. COMPONENTS OF INCOME TAX EXPENSE

From Continuing Operation From Discontinued Operations
Year ended Year ended Year ended Year ended
31st March, 2017 31st March, 2016 31st March, 2017 31st March, 2016
I. Tax expense recognised in the Statement of Profit and Loss
Current tax
Current year 2,011 1,933 - (0)
Adjustments/(credits) related to previous years - (net) (64) (54) (1) -
Total (A) 1,947 1,879 (1) (0)
Deferred tax charge/(credit)
Origination and reversal of temporary differences 30 (4) - 1
Total (B) 30 (4) - 1
Total (A+B) 1,977 1,875 (1) 1
II. Tax on Other Comprehensive Income
Deferred tax charge/(credit)
Gain/(loss) on remeasurement of net defined benefit plans (11) (5) - -

Gain/(loss) on debt instruments through other comprehensive (0) (1) - -
income
(11) (6) - -

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 175

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
B. RECONCILIATION OF EFFECTIVE TAX RATE
The reconciliation between the statutory income tax rate applicable to the Company and the effective income tax rate of the Company is as follows:

As at As at
31st March, 2017 31st March, 2016
Statutory income tax rate 34.4% 34.6%
Differences due to:
Expenses not deductible for tax purposes 2.0% 1.9%
Income exempt from income tax -0.9% -0.9%
Income tax incentives -4.5% -4.5%
Others* -0.4% 0.0%
Effective tax rate 30.6% 31.1%
*Others include prior period adjustment tax refunds and tax on exceptional items

C. DEFERRED TAX ASSETS AND LIABILITIES

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Deferred tax assets 170 168 157
Deferred tax liabilities - (1) -
Net Deferred tax assets/(liabilities) 170 167 157

D. MOVEMENT IN DEFERRED TAX ASSETS AND LIABILITIES

Movement during the year ended 31st As at Credit/(charge) Credit/(charge) On account As at
March, 2016 1st April, 2015 in the Statement in Other of Business 31st March,
of Profit and Loss Comprehensive Combination 2016
Income
Deferred tax assets/(liabilities)
Provision for post retirement benefits and other 154 (0) 5 - 159
employee benefits
Provision for doubtful debts and advances 29 (7) - - 22
Expenses allowable for tax purposes when paid 139 2 - - 141
Accelerated Tax Depreciation (277) (8) - - (285)
Fair value (gains)/losses (42) (26) 1 - (67)
Other temporary differences 154 43 - - 197
157 4 6 - 167

Movement during the year ended 31st As at Credit/(charge) Credit/(charge) On account As at

March, 2017 1st April, 2016 in the Statement in Other of Business 31st March,
of Profit and Loss Comprehensive Combination 2017
Income
Deferred tax assets/(liabilities)
Provision for post retirement benefits and other 159 (33) 11 - 137
employee benefits
Provision for doubtful debts and advances 22 (0) - - 22
Expenses allowable for tax purposes when paid 141 (12) - - 129
Depreciation (285) (71) - 22 (334)
Fair value gain/(loss) on investments (67) (17) - - (84)
Other temporary differences 197 103 0 - 300
167 (30) 11 22 170

Annual Report 2016-17 Hindustan Unilever Limited

176 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
E. TAX ASSETS AND LIABILITIES
As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Non Current tax assets (net) 461 381 363
Non Current tax liabilities (net) 432 306 230

F. UNRECOGNISED DEFERRED TAX ASSETS

As at 31st March, 2017 As at 31st March, 2016
Gross Amount Unrecognised Tax Gross Amount Unrecognised Tax
effect effect
Deductible temporary difference (59) (20) (31) (11)
Tax losses 165 57 139 48
106 37 108 37

G. TAX LOSSES CARRIED FORWARD

As at As at
Expiry date Expiry date
31st March, 2017 31st March, 2016
Brought forward losses ( allowed to carry for- 63 2018-22 63 2018-22
ward for specified period)
Brought forward losses ( allowed to carry for- 5 2023-25 2 2023-24
ward for specified period)
Brought forward losses ( allowed to carry for- 97 74
ward for infinite period)
Deferred tax assets have not recognized in respect of the following items, because it is not probable that future taxable profit will be available against
which the Company can use the benefits.The above is arrived basis the balances as on date. Part of the tax losses expires in 2018-2022 and part in 2023-
2025. The deductible temporary difference do not expire under the current tax legislation.

10 OTHER NON-CURRENT ASSETS

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Deferred lease rent 1 1 1
Security Deposits with customs, port trust, excise and other 39 32 39
government authorities
Capital advances 35 22 10
Other advances (includes advances for materials) 30 35 47
Less: Allowance for bad and doubtful advances (30) (35) (47)
75 55 50
The movement in allowance for bad and doubtful advances is as
follows:
Balance as at beginning of the year 35 47 51
Allowance for bad and doubtful assets during the year 3 5 7
Written off during the year (8) (17) (11)
Balance as at the end of the year 30 35 47

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 177

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
11 INVENTORIES
Refer Note 2.4 (c) for accounting policy on Inventories.

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Raw materials [includes in transit: ` 86 crores (31st March, 2016: 863 904 896
` 68 crores and 1st April, 2015: ` 32 crores)]
Packing materials 107 125 132
Work-in-progress 229 376 318
Finished goods [includes in transit: ` 34 crores (31st March, 2016: ` 46 1,268 1,251 1,400
crores and 1st April, 2015: ` 39 crores)] (Refer note (a) below)
Stores and spares 74 70 70
2,541 2,726 2,816
(a) Finished goods includes goods purchased for re-sale, as both are stocked together.
(b) The write down of Inventories to net realisable value during the year amounted to ` 151 crores (31st March, 2016: ` 177 crores). The reversal of
write down during the year amounted to ` 2 crores (31st March, 2016: ` 2 crores).

12 TRADE RECEIVABLES
(Unsecured unless otherwise stated)
Refer Note 2.4 (f) for accounting policy on Trade Receivables.

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Considered good 1,085 1,264 1,007
Considered doubtful 39 30 41
Less: Allowance for bad and doubtful debts (39) (30) (41)
1,085 1,264 1,007
The movement in allowance for bad and doubtful debts is as follows:
Balance as at beginning of the year 30 41 40
Add: Allowance for bad and doubtful debts during the year 12 6 5
Less: Trade receivables written off during the year (3) (17) (4)
Balance as at the end of the year 39 30 41
Refer Note 42 for information about credit risk and market risk of trade receivables.

13 CASH AND CASH EQUIVALENTS

Refer Note 2.4 (d) for accounting policy on Cash and Cash Equivalents

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Cash on hand 0 0 1
Cheques/drafts on hand - - 0
Balances with banks
In current accounts 110 290 84
Term deposits with original maturity of less than three months 518 540 572
Short-term, highly liquid investments
Treasury bills with original maturity of less than three months - - 148
628 830 805

Annual Report 2016-17 Hindustan Unilever Limited

178 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
14 BANK BALANCES OTHER THAN CASH AND CASH EQUIVALENTS
As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Earmarked balances with banks
Unpaid dividend account 116 105 94
Margin money deposits - - 2
Investments in term deposits (with original maturity of more than 1,084 2,074 1,785
three months but less than twelve months)
1,200 2,179 1,881

15 OTHER CURRENT ASSETS

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Export benefits receivable 33 36 34
VAT credit receivable 55 26 27
CENVAT receivable 246 231 170
Balances with government authorities (net of provision) 4 4 12
Other advances (includes prepaid expenses etc.) 260 228 196
598 525 439

16 ASSETS HELD FOR SALE

Refer Note 2.4 (e) for accounting policy on Assets Held for Sale.

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Groups of assets held for sale
Freehold Land 2 2 1
Buildings 18 19 4
Plant and equipment 1 1 4
Furniture and fixtures 0 0 0
Vehicles 0 0 -
Office equipment 0 0 0
Investment in Joint Venture 26 - -
47 22 9

17 EQUITY SHARE CAPITAL

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Authorised
2,25,00,00,000 (31st March, 2016: 2,25,00,00,000 and 1st April, 2015: 225 225 225
2,25,00,00,000) equity shares of ` 1 each
Issued, subscribed and fully paid up
2,16,43,49,639 (31st March, 2016: 2,16,39,36,971 and 1st April, 2015: 216 216 216
2,16,34,64,851) equity shares of ` 1 each
216 216 216

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 179

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
a) Reconciliation of the number of shares

Equity Shares: As at 31st March , 2017 As at 31st March, 2016 As at 1st April, 2015
Number of shares Amount Number of shares Amount Number of shares Amount
Balance as at the beginning of the year 2,16,39,36,971 216 2,16,34,64,851 216 2,16,26,96,292 216
Add: ESOP shares issued during the year (Refer 4,12,668 0 4,72,120 0 7,68,559 0
note 44)
Balance as at the end of the year 2,16,43,49,639 216 2,16,39,36,971 216 2,16,34,64,851 216
b) Rights, preferences and restrictions attached to shares
Equity shares: The Company has one class of equity shares having a par value of ` 1 per share. Each shareholder is eligible for one vote per share
held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential
amounts, in proportion to their shareholding.
c) Shares held by holding Company and subsidiaries of holding Company in aggregate

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Equity Shares of ` 1 each:
1,11,43,70,148 shares (31st March, 2016: 1,11,43,70,148 and 1st April, 2015: 111 111 111
1,11,43,70,148) held by Unilever PLC, UK, the holding Company
34,00,42,710 shares (31st March, 2016: 34,00,42,710 and 34 34 34
1st April, 2015: 34,00,42,710) held by subsidiaries of the holding Company
d) Details of equity shares held by shareholders holding more than 5% of the aggregate shares in the Company

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Number of shares 1,11,43,70,148 1,11,43,70,148 1,11,43,70,148
Unilever PLC, UK, the holding Company 51.49% 51.50% 51.51%
e) Shares reserved for issue under options

As at 31st March , 2017 As at 31st March, 2016 As at 1st April, 2015

Number of shares Amount Number of shares Amount Number of Amount
shares
Under 2001 HLL Stock Option Plan: equity shares - - - - 23,100 0
of ` 1 each, at an exercise price of ` 132.05 per
share
Under 2006 HUL Performance Share Scheme: - - - - 3,64,566 0
equity shares of ` 1 each, at an exercise price of
` 1 per share
Under 2012 HUL Performance Share Scheme: equity 5,52,414 0 8,85,044 0 7,47,221 0
shares of ` 1 each, at an exercise price of ` 1 per share
(refer note 44)
5,52,414 0 8,85,044 0 11,34,887 0
For terms and other details Refer Note 44.
f) Aggregate number of shares bought back during 5 years immediately preceding 31st March, 2017

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
No. of equity shares bought back by the Company - 2,28,83,204 2,28,83,204

Annual Report 2016-17 Hindustan Unilever Limited

180 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
18 OTHER EQUITY
Refer Statement of Changes in Equity for detailed movement in Equity balance.
A. Summary of Other Equity balance

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Capital Reserve 4 4 4
Capital Redemption Reserve 6 6 6
Securities Premium Reserve 116 98 81
Employee Stock Options Outstanding Account 29 43 41
General Reserve 2,301 2,301 2,301
Retained Earnings 4,046 3,864 3,789
Other Reserves 9 9 9
Employees Housing Reserve 48 43 6
Export profit reserves 0 0 0
Items of Other Comprehensive Income
- Remeasurements of net defined benefit plans (33) (11) -
- Fair value of Debt instruments through OCI 2 0 1
Total Attributable to owners of the Company 6,528 6,357 6,238
Attributable to Non-controlling Interest 22 20 19
Total equity 6,550 6,377 6,257
B. Nature and purpose of reserves
(a) Capital Reserve: Investments in associates and subsidiaries by the Company are accounted under the equity method and its share of pre-acquisition
profits are reflected as capital reserve. During amalgamation, the excess of net assets taken, over the cost of consideration paid is treated as capital
reserve.
(b) Capital Redemption Reserve: The Company has recognised Capital Redemption Reserve on the buyback of equity shares from its retained earnings.
The amount in the Capital Redemption Reserve is equal to the nominal amount of the equity shares bought back.
(c) Securities Premium Reserve: The amount received in excess of face value of the equity shares is recognised in Securities Premium Reserve. In
case of equity-settled share based payment transactions, the difference between fair value on grant date and nominal value of share is accounted
as securities premium reserve.
(d) Employee Stock Options Outstanding Account: The fair value of the equity-settled share based payment transactions with employees is recognised
in Statement of Profit and Loss with corresponding credit to Employee Stock Options Outstanding Account.
(e) General Reserve : The Company has transferred a portion of the net profit of the Company before declaring dividend to general reserve pursuant
to the earlier provision of companies Act 1956. Mandatory transfer to general reserve is not required under the Companies Act 2013.
(f) Retained Earnings: Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or
other distributions paid to investors
(g) Other Reserves: The Company has recognised Other Reserves on amalgamation of Brooke Bond Lipton India Limited as per statutory requirements.
This reserve is not available for capitalisation/declaration of dividend/ share buy-back. Further it also includes capital subsidy and revaluation
reserve.
(h) Employees Housing Reserve : As required by the local labour act of Nepal, on a yearly basis a portion of gross profit earned by the Company is
transferred to housing fund reserve which will be used to provide housing facilities to the employees.
(I) Export profit reserves : Export Profit Reserve has been created to protect, from any losses due to volatility in business.
(j) Debt Instruments through Other Comprehensive Income: The fair value change of the debt instruments measured at fair value through other
comprehensive income is recognised in Debt instruments through Other Comprehensive Income. Upon derecognition, the cumulative fair value
changes on the said instruments are reclassified to the Statement of Profit and Loss.

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 181

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
C. Other Comprehensive Income accumulated in Other Equity, net of tax
The disaggregation of changes in other comprehensive income by each type of reserve in equity is shown below:

Remeasurements of net Debt instruments through Total

defined benefit plans Other Comprehensive Income
As at 1st April, 2015 - 1 1
Re-measurement gain/(loss) on net defined benefit plans (16) - (16)
Gain/(loss) on debt instruments recognised in other comprehensive 0 (2) (2)
income
Reclassified to Statement of Profit and Loss - - -
Income tax effect 5 1 6
As at 31st March, 2016 (11) (0) (11)
Re-measurement gain/(loss) on net defined benefit plans (33) - (33)
Gain/(loss) on debt instruments recognised in other comprehensive - 2 2
income
Reclassified to Statement of Profit and Loss - - -
Income tax effect 11 (0) 11
As at 31st March, 2017 (33) 2 (31)
D. Capital Management
Equity share capital and other equity are considered for the purpose of Groups capital management.
The Group manages its capital so as to safeguard its ability to continue as a going concern and to optimise returns to shareholders. The capital structure
of the Group is based on managements judgement of its strategic and day-to-day needs with a focus on total equity so as to maintain investor, creditors
and market confidence.
The management and the board of directors monitors the return on capital as well as the level of dividends to shareholders. The Group may take
appropriate steps in order to maintain, or if necessary adjust, its capital structure.

19 NON-CONTROLLING INTERESTS
The following table summarises the financial information relating to Unilever Nepal Limited that has non-controlling interests (20%).

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Non-current assets 156 135 107
Current assets 153 131 132
Non-current liabilities (122) (108) (91)
Current liabilities (78) (60) (51)
Net assets 109 98 97
Carrying amount of non-controlling interests 22 20 19

Annual Report 2016-17 Hindustan Unilever Limited

182 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

Year ended Year ended

31st March, 2017 31st March, 2016
Revenue from operations 312 264
Profit for the year 69 58
Other comprehensive income for the year (0) (0)
Total comprehensive income for the year 69 58
Attributable to non-controlling interests (20%):
Profit for the year 14 12
Other comprehensive income for the year (0) (0)
Cash flows from:
Operating activities 57 73
Investing activities (2) (16)
Financing activities (58) (56)
Net increase/(decrease) in cash and cash equivalents (3) 1
Dividend paid to non-controlling interests 12 11

20 OTHER FINANCIAL LIABILITIES

Refer Note 2.4 (f) for accounting policy on Financial Instruments.

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
NON-CURRENT
Security deposits 24 20 20
Contingent consideration 49 - -
Total (A) 73 20 20
CURRENT
Unpaid dividends 116 106 94
Derivatives - foreign exchange forward contracts 13 12 39
Other payables (payable for purchase of property, plant and equipment 62 136 87
etc.)
Deferred borrowings 3 3 0
Book Overdraft 1 1 3
Interest accrued but not due 0 0 -
Total (B) 195 258 223
Total (A+B) 268 278 243
a) There are no amounts due for payment to the Investor Education and Protection Fund under Section 125 of the Companies Act, 2013 as 31st
March,2017 (31st March 2016: Nil, 1st April 2015: Nil).

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 183

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
21 PROVISIONS
Refer Note 2.4 (g) for accounting policy on Provisions.

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
NON-CURRENT
Provision for employee benefits (pension, medical, compensated 106 203 178
absences[Refer Note 43] and others)
Other provisions (including for statutory levies etc.) - net [Refer (a) 408 420 340
below]
Total (A) 514 623 518
CURRENT
Provision for employee benefits (gratuity, pension, medical, compen- 41 29 44
sated absences[Refer Note 43] and others)
Other provisions (including restructuring etc.) [Refer (a) below] 351 264 186
Total (B) 392 293 230
Total (A+B) 906 916 748
a) Movement in Other provisions (Non-current and Current)

Indirect Tax related Legal and Other Matters Total

Balance as at 1st April, 2015 260 266 526
Add: Provision/reclassified during the year * 64 205 269
Less: Amount utilised/reversed during the year (71) (40) (111)
Balance as at 31st March, 2016 253 431 684
Add: Provision/reclassified during the year * 135 75 210
Less: Amount utilised/reversed during the year (93) (42) (135)
Balance as at 31st March, 2017 295 464 759
* includes unwinding of discount and change in discount rate.

The provisions for indirect taxes and legal matters comprises of numerous separate cases that arise in the ordinary course of business. These provisions
have not been discounted as it is not practicable for the Group to estimate the timing of the provision utilisation and cash outflows, if any, pending
resolution.

22 OTHER NON-CURRENT LIABILITIES

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Employee and ex-employee related liabilities 207 184 134
207 184 134

23 CURRENT BORROWINGS
Refer Note 2.4 (q) for accounting policy on Borrowings.

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Unsecured loan from banks 277 177 -
277 177 -
Refer note 42 for information about liquidity risk and market risk of short term borrowings.
Unsecured loan taken from banks for export packing credit requirement amounting to ` 280 crores (March 31, 2016 : ` 180 crores) payable in April 2017
` 100 crores (@3.47% interest rate) and payable in September 2017 ` 180 crores (@ 3.07% interest rate).
Annual Report 2016-17 Hindustan Unilever Limited
184 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
24 TRADE PAYABLES
Refer Note 2.4 (f) for accounting policy on Trade Payables.

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
DUES TO MICRO AND SMALL ENTERPRISES (as per the intimation
received from vendors)
a. Principal and interest amount remaining unpaid 0 - -
b. Interest due thereon remaining unpaid - - -
c. Interest paid by the Company in terms of Section 16 of the Micro, - - -
Small and Medium Enterprises Development Act, 2006, along with
the amount of the payment made to the supplier beyond the ap-
pointed day
d. Interest due and payable for the period of delay in making payment - - -
(which have been paid but beyond the appointed day during the
period) but without adding interest specified under the Micro, Small
and Medium Enterprises Act, 2006
e. Interest accrued and remaining unpaid - - -
f. Interest remaining due and payable even in the succeeding years, - - -
until such date when the interest dues as above are actually paid to
the small enterprises
DUES TO OTHERS
Acceptances 243 343 440
Trade payables 5,943 5,342 5,001
6,186 5,685 5,441
Refer Note 42 for information about liquidity risk and market risk of trade payables.

25 OTHER CURRENT LIABILITIES

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Salaries, wages and bonus payable 211 203 291
Statutory dues (including provident fund, tax deducted at source and 375 406 409
others)
Advance from customers 78 45 45
Other payables - - 17
664 654 762

26 CONTINGENT LIABILITIES AND COMMITMENTS

Refer Note 2.4 (g) for accounting policy on Contingent Liabilities.

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
A. CONTINGENT LIABILITIES
Claims against the Group not acknowledged as debts
Income tax matters 646 654 566
Sales tax matters 125 64 64
Excise duty, service tax and customs duty matters 194 237 204
Other matters including claims related to employees/ 85 83 80
ex-employees, property related demands, etc.

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 185

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
(i) It is not practicable for the Group to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective
proceedings as it is determinable only on receipt of judgments/decisions pending with various forums/authorities.
(ii) The Group does not expect any reimbursements in respect of the above contingent liabilities.
(iii) The Groups pending litigations comprise of proceedings pending with Income Tax, Excise, Custom, Sales tax/VAT, other authorities and claims
against the Group by employees. The Group has reviewed all its pending litigations and proceedings and has adequately provided for where
provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The Group does not expect the
outcome of these proceedings to have a materially adverse effect on its financial results.
(iv) The Group has given Bank Guarantees in respect of certain matters of above contingent liabilities.
Corporate Guarantee given 8 8 10

B. COMMITMENTS
i) Operating lease commitments
The Groups significant leasing arrangements are in respect of operating leases for premises (residential, office, stores, godown etc.) and computers.
These leasing arrangements which are cancellable (other than those specified below), range between 11 months and 10 years generally, or longer, and
are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as rent in the Statement of
Profit and Loss.
The Group has entered into agreement to take certain land and building on operating lease for warehousing activities from a third party. The lease
arrangement is for 10 years, including a non-cancellable term of 9 years. The lease rent of ` 14 crores (2015-16: ` 13 crores) on such lease is included
in Rent.
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

Year ended Year ended

31st March, 2017 31st March, 2016
Not later than one year 14 13
Later than one year and not later than five years 58 55
Later than five years 24 38

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
ii) Capital commitments
Estimated value of contracts in capital account remaining to be 257 148 166
executed and not provided for (net of capital advances)
iii) Other commitments
Unexpired Letter of credit and acceptances 8 5 5
265 153 171

27 REVENUE FROM OPERATIONS

Refer Note 2.4 (h) for accounting policy on Revenue Recognition

Year ended Year ended

31st March, 2017 31st March, 2016
Sale of products (including excise duty) 34,964 33,891
Other operating revenue
Income from services rendered 513 490
Others (including salon services, scrap sales, export incentives, commission, lease license 282 235
fee etc.)
35,759 34,616

Annual Report 2016-17 Hindustan Unilever Limited

186 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
28 OTHER INCOME
Refer Note 2.4 (h) for accounting policy on Revenue Recognition

Year ended Year ended

31st March, 2017 31st March, 2016
Interest income on
Bank deposits 184 211
Current investments 74 108
Others 2 4
Dividend income from
Current investments 14 33
Non-current investments - 1
Fair value gain/(loss)
Investments measured at fair value through profit or loss 86 69
Investments measured at fair value through other comprehensive income 0 (3)
Net gain on sale of investments 9 0
369 423

29 COST OF MATERIALS CONSUMED

Year ended Year ended
31st March, 2017 31st March, 2016
Raw materials consumed 9,383 9,212
Packing materials consumed 2,563 2,600
11,946 11,812

30 PURCHASES OF STOCK-IN-TRADE
Year ended Year ended
31st March, 2017 31st March, 2016
Purchases of stock-in-trade 4,223 3,972
4,223 3,972

31 CHANGES IN INVENTORIES OF FINISHED GOODS (INCLUDING STOCK-IN-TRADE) AND WORK-IN-PROGRESS

Year ended Year ended
31st March, 2017 31st March, 2016
Opening inventories
Finished goods 1,251 1,400
Work-in-progress 375 318
Closing inventories
Finished goods (1,268) (1,251)
Work-in-progress (229) (376)
Excise duty on increase/(decrease) of finished goods 15 (8)
144 83

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 187

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
32 EXCISE DUTY
Year ended Year ended
31st March, 2017 31st March, 2016
Excise duty 2,597 2,430
2,597 2,430

33 EMPLOYEE BENEFITS EXPENSES

Refer Note 2.4 (j) for accounting policy on Employee Benefits.

Year ended Year ended

31st March, 2017 31st March, 2016
Salaries and wages, bonus etc. 1,439 1,340
Contribution to provident funds and other funds 86 81
Defined benefit plan expense (Refer Note 43) 18 19
Share based payments to employees (Refer Note 44) 94 127
Workmen and staff welfare expenses 106 113
1,743 1,680

34 FINANCE COSTS
Year ended Year ended
31st March, 2017 31st March, 2016
Interest expense on book overdraft and others 14 2
Net interest on the net defined benefit liability (Refer Note 43) 6 13
Unwinding of discount on provisions and liabilities 8 -
Unwinding of discount on employee and ex-employee related liabilities 7 2
35 17

35 DEPRECIATION AND AMORTISATION EXPENSES

Refer Note 2.4 (a) and (b) for accounting policy on Property, Plant and Equipment and Intangibles.

Year ended Year ended

31st March, 2017 31st March, 2016
Depreciation on property, plant & equipment 420 342
Amortisation on intangible assets 12 11
432 353

Annual Report 2016-17 Hindustan Unilever Limited

188 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
36 OTHER EXPENSES
Year ended Year ended
31st March, 2017 31st March, 2016
Advertising and promotion 3,542 3,656
Carriage and freight 1,516 1,522
Royalty
- Technology 521 496
- Brand 170 132
- Service 378 1,069 276 904
Power, fuel, light and water 295 309
Rent 267 256
Processing charges 193 236
Travelling and motor car expenses 179 181
Repairs 131 130
Rates & taxes (excluding income tax) 116 126
Corporate social responsibility expense [Refer 107 96
note (a) below]
Miscellaneous expenses 1,351 1,203
8,766 8,619
(a) The Group has spent ` 107 crores (2015-16: ` 96 crores) towards various schemes of Corporate Social Responsibility as prescribed under section
135 of the Companies Act, 2013. The details are:
I. Gross amount required to be spent by the Group during the year: ` 105 crores (2015-16: ` 95 crores)
II. Amount spent during the year on:

Year ended Year ended

31st March, 2017 31st March, 2016
In cash /payable Yet to be paid in Cash In cash /payable Yet to be paid in Cash
i) Construction/Acquisition of any asset - - - -
ii) For purposes other than (i) above 107 - 96 -
107 - 96 -
III. The Company does not carry any provisions for Corporate social responsibility expenses for the current year and previous year.

37 EXCEPTIONAL ITEMS
Year ended Year ended
31st March, 2017 31st March, 2016
i) Profit on disposal of surplus properties 164 60
ii) Profit on disposal of business/subsidiary 19 50
iii) Decrease in liability on account of plans amendments basis actuarial valuation 115 -
Total exceptional income (A) 298 110
i) Restructuring costs (61) (141)
Total exceptional expenditure (B) (61) (141)
Exceptional items (net) (A+B) 237 (31)

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 189

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
38 DISCONTINUED OPERATIONS
During the year Ponds Exports Limited (PEL) has closed down its existing operation and are evaluating future course of action on the going concern
assumption. This is in line with our group strategy of exiting non-core business.

A. Results of discontinued operation

Year ended Year ended
31st March, 2017 31st March, 2016
Revenue 90 117
Expenses 103 124
Results from discontinued operations before tax (13) (7)
Less: Inter-company Elimination 0 1
Tax Expense
Current tax 1 0
Deferred tax credit/(charge) - (1)
Results from discontinued operations (12) (7)
The loss from discontinued operations of ` 12 crores (2015-16 loss ` 7 crores) is attributable entirely to the owners of the Company.

B. Net Cash generated/(used in) from discontinued operations

Year ended Year ended
31st March, 2017 31st March, 2016
Net cash generated from operating activities (0) 5
Net cash (used in)/generated from investing activities 1 1
Net cash used in financing activities 0 (7)
Net cash flows for the year 1 (1)

39 EARNINGS PER EQUITY SHARE

Refer Note 2.4 (o) for accounting policy on Earnings Per Share.

A. From Continuing operations

Year ended Year ended
31st Marc h, 2017 31st March, 2016
Earnings Per Share has been computed as under:
Profit for the year attributable to the owners of the Company 4,476 4,139
Weighted average number of equity shares outstanding 2,16,42,12,891 2,16,37,96,723
Earnings Per Share (`) - Basic (Face value of ` 1 per share) ` 20.68 ` 19.13
Add: Weighted average number of potential equity shares on account of employee stock 4,25,681 7,21,610
options/performance share schemes
Weighted average number of Equity shares (including dilutive shares) outstanding 2,16,46,38,572 2,16,45,18,333
Earnings Per Share (`) - Diluted (Face value of ` 1 per share) ` 20.68 ` 19.12

B. From Discountinued operations

Year ended Year ended
31st March, 2017 31st March, 2016
Earnings Per Share has been computed as under:
Profit for the year attributable to the owners of the Company (12) (7)
Weighted average number of equity shares outstanding 2,16,42,12,891 2,16,37,96,723
Earnings Per Share (`) - Basic (Face value of ` 1 per share) ` (.06) ` (.03)
Add: Weighted average number of potential equity shares on account of employee stock 4,25,681 7,21,610
options/performance share schemes
Weighted average number of Equity shares (including dilutive shares) outstanding 2,16,46,38,572 2,16,45,18,333
Earnings Per Share (`) - Diluted (Face value of ` 1 per share) ` (.06) ` (.03)

Annual Report 2016-17 Hindustan Unilever Limited

190 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
40 DIVIDEND ON EQUITY SHARE
Year ended Year ended
31st March, 2017 31st March, 2016
Dividend on equity shares declared and paid during the year
Final dividend of ` 9.50 per share for FY 2015-16 (2014-15: ` 9.00 per share) 2,056 1,947
Dividend distribution tax on final dividend* 419 396
Interim dividend of ` 7.00 per share for FY 2016-17 (2015-16: ` 6.50 per share) 1,515 1,407
Dividend distribution tax on interim dividend* 274 259
4,264 4,009
*Dividend Distribution Tax (DDT)-net, pertaining to the current year comprises the DDT on interim and proposed final dividend and the credit in respect of tax paid under
section 115 O of the Indian Income-tax Act, 1961 by the Company on dividend received from its domestic and foreign subsidiaries during the year.

41 FINANCIAL INSTRUMENTS
Refer Note 2.4 (f) for accounting policy on Financial Instruments.

A. ACCOUNTING CLASSIFICATIONS AND FAIR VALUES

The carrying amounts and fair values of financial instruments by class are as follows:

Carrying value /Fair value

Note As at As at As at
31st March , 2017 31st March, 2016 1st April, 2015
FINANCIAL ASSETS
Financial assets measured at fair value
Investments measured at
i. Fair value through other comprehensive income 7 1,459 1,264 1,799
ii. Fair value through profit or loss 7 2,335 1,302 980
Derivatives - foreign exchange forward contracts 8 14 15 10
Financial assets measured at amortised cost
Investments 7 0 0 0
Investments in term deposits 8,14 1,085 2,074 1,786
Security deposits 8 123 115 112
Other assets 8 251 204 255
5,267 4,974 4,942
FINANCIAL LIABILITIES
Financial liabilities measured at fair value
Derivatives - foreign exchange forward contracts 20 13 12 39
Contingent consideration 20 49 - -
Borrowings 23 277 177 -
Financial liabilities measured at amortised cost
Security deposits 20 24 20 20
Other payables 20 62 136 87
425 345 146
The Group has disclosed financial instruments such as cash and cash equivalents, other bank balances, trade receivables, current account balances
with group companies and joint venture, trade payables, unpaid dividends, deferred borrowings, interest accrued but not due and book overdraft at
carrying value because their carrying amounts are a reasonable approximation of the fair values due to their short term nature.

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 191

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
B. INCOME, EXPENSES, GAINS OR LOSSES ON FINANCIAL INSTRUMENTS
Interest income and expenses, gains or losses recognised on financial assets and liabilities in the Statement of Profit and Loss are as follows:

Year ended Year ended

31st March, 2017 31st March, 2016
Financial assets measured at amortised cost
Interest income 186 215
Allowance for doubtful debts 6 (3)
Financial assets measured at fair value through other comprehensive income
Investment in debt instruments
Interest income 74 108
Fair value gain/(loss) recognised in other comprehensive income 2 (4)
Reclassified from other comprehensive income to Statement of Profit and Loss 0 (3)
Financial assets measured at fair value through profit or loss
Fair value gain/(loss) on investment in debt instruments 86 69
Financial liabilities measured at amortised cost
Interest expense 14 2
Derivatives - foreign exchange forward contracts
Fair value gain/(loss) 22 1

C. FAIR VALUE HIERARCHY

The fair value of financial instruments as referred to in note (A) above have been classified into three categories depending on the inputs used in the
valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurements)
and lowest priority to unobservable inputs (Level 3 measurements).
The categories used are as follows:
Level 1: Quoted prices for identical instruments in an active market;
Level 2: Directly or indirectly observable market inputs, other than Level 1 inputs; and
Level 3: Inputs which are not based on observable market data.
For assets and liabilities which are measured at fair value as at Balance Sheet date, the classification of fair value calculations by category is summarized below:

Level 1 Level 2 Level 3 Total

As at 31st March, 2017
Assets at fair value
Investments measured at:
i. Fair Value through OCI 1,459 - - 1,459
ii. Fair Value through Profit or Loss 0 2,329 6 2,335
Derivatives - foreign exchange forward contracts - 14 - 14
Liabilities at fair value
Derivatives - foreign exchange forward contracts - 13 - 13
Contingent consideration - - 49 49
Borrowings - 277 - 277

Annual Report 2016-17 Hindustan Unilever Limited

192 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

Level 1 Level 2 Level 3 Total

As at 31st March, 2016
Assets at fair value
Investments measured at:
i. Fair Value through OCI 1,264 - - 1,264
ii. Fair Value through Profit or Loss 0 1,296 6 1,302
Derivatives - foreign exchange forward contracts - 15 - 15
Other financial assets - - - -
Liabilities at fair value
Derivatives - foreign exchange forward contracts - 12 - 12
Contingent consideration - - - -
Borrowings - 177 - 177
As at 1st April, 2015
Assets at fair value
Investments measured at:
i. Fair Value through OCI 1,799 - - 1,799
ii. Fair Value through Profit or Loss 0 974 6 980
Derivatives - foreign exchange forward contracts - 10 - 10
Treasury bills with original maturity of less than three months 148 - - 148
Liabilities at fair value
Derivatives - foreign exchange forward contracts - 39 - 39
Contingent consideration - - - -
Borrowings - - - -
There were no significant changes in the classification and no significant movements between the fair value hierarchy classifications of assets and
liabilities during FY 2016-17.

CALCULATION OF FAIR VALUES

The fair values of the financial assets and liabilities are defined as the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. Methods and assumptions used to estimate the fair values are consistent
with those used for the year ended 31st March, 2016.
Financial assets and liabilities measured at fair value as at Balance Sheet date:
1. The fair values of investment in treasury bills, government securities and quoted investment in equity shares is based on the current bid price of
respective investment as at the Balance Sheet date.
2. The fair values of investments in mutual fund units is based on the net asset value (NAV) as stated by the issuers of these mutual fund units in
the published statements as at Balance Sheet date. NAV represents the price at which the issuer will issue further units of mutual fund and the
price at which issuers will redeem such units from the investors.
3. The fair values of the derivative financial instruments has been determined using valuation techniques with market observable inputs. The models
incorporate various inputs including the credit quality of counter-parties and foreign exchange forward rates.

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 193

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
4. Financial liabilities valued using Level 2 valuation techniques comprise of borrowing including deferred borrowings of ` 280 crores (March 31,
2016: ` 180 crores) from bank under the scheme issued by Government namely, Interest Equalisation on Pre and Post Shipment Rupee Export
Credit. The fair values of borrowings are determined by using DCF method, using discount rate that reflects the issuers borrowing rate as at the
end of the reporting period. The own non performance risk as at 31st March 2017 and 31st March 2016 was assessed to be insignificant.
Other financial assets and liabilities
- Cash and cash equivalents (except for investments in mutual funds), trade receivables, investments in term deposits, other financial assets
(except derivative financial instruments), trade payables, and other financial liabilities (except derivative financial instruments) have fair values
that approximate to their carrying amounts due to their short-term nature.
- Loans have fair values that approximate to their carrying amounts as it is based on the net present value of the anticipated future cash flows
using rates currently available for debt on similar terms, credit risk and remaining maturities.
SIGNIFICANT UNOBSERVABLE INPUTS USED IN LEVEL 3 FAIR VALUES

As at 31st March, 2017
Contingent consideration
Significant unobservable inputs Sensitivity of input to fair value measurement
Forecast revenue: 10% increase in forecasted revenue will have additional Liability of ` 5
crores and 10% decrease will have an equal but opposite effect.
Discount rate: 12% 1% increase in Discount rate will have P&L gain of ` 2 crores 1%
decrease will have an equal but opposite effect.

42 FINANCIAL RISK MANAGEMENT

The Group business activities are exposed to a variety of financial risks, namely liquidity risk, market risks and credit risk. The Group senior management
has the overall responsibility for establishing and governing the Group risk management framework. The Group has constituted a Risk Management
Committee, which is responsible for developing and monitoring the Group risk management policies. The Group risk management policies are established
to identify and analyse the risks faced by the Group, to set and monitor appropriate risk limits and controls, periodically review the changes in market
conditions and reflect the changes in the policy accordingly. The key risks and mitigating actions are also placed before the Audit Committee of the Company.

A. MANAGEMENT OF LIQUIDITY RISK

Liquidity risk is the risk that the Group will face in meeting its obligations associated with its financial liabilities. The Group approach to managing
liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management
considers both normal and stressed conditions.
The Group maintained a cautious liquidity strategy, with a positive cash balance throughout the year ended 31st March, 2017 and 31st March, 2016. Cash
flow from operating activities provides the funds to service and finance the financial liabilities on a day-to-day basis.
The Group regularly monitors the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short term
surplus cash generated , over and above the amount required for working capital management and other operational requirements, is retained as cash
and cash equivalents (to the extent required) and any excess is invested in interest bearing term deposits and other highly marketable debt investments
with appropriate maturities to optimise the cash returns on investments while ensuring sufficient liquidity to meet its liabilities.
The following table shows the maturity analysis of the Groups financial liabilities based on contractually agreed undiscounted cash flows along with its
carrying value as at the Balance Sheet date.

Undiscounted Amount
Carrying amount
Payable within 1 year More than 1 years Total
As at 31st March, 2017
Non-derivative liabilities
Borrowings 277 277 - 277
Trade payables (including acceptances) 6,186 6,186 - 6,186
Security deposits 24 - 24 24
Unpaid dividend 116 116 - 116
Other Payables* 66 66 - 66
Contingent consideration 49 - 73 73
Derivative liabilities
Forward exchange contracts 13 13 - 13

Annual Report 2016-17 Hindustan Unilever Limited

194 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

Undiscounted Amount
Carrying amount
Payable within 1 year More than 1 years Total
As at 31st March, 2016
Non-derivative liabilities
Borrowings 177 177 - 177
Trade payables (including acceptances) 5,685 5,685 - 5,685
Security deposits 20 - 20 20
Unpaid dividend 106 106 - 106
Other Payables* 140 140 - 140
Contingent consideration - - - -
Derivative liabilities
Foreign exchange forward contracts 12 12 - 12
As at 1st April, 2015
Non-derivative liabilities
Trade payables (including acceptances) 5,441 5,441 - 5,441
Security deposits 20 - 20 20
Unpaid dividend 94 94 - 94
Other Payables* 90 90 - 90
Contingent consideration - - - -
Derivative liabilities
Foreign exchange forward contracts 39 39 - 39
* Includes other payables, deferred borrowings, book overdraft and interest accrued but not due

B. MANAGEMENT OF MARKET RISK

The Group size and operations result in it being exposed to the following market risks that arise from its use of financial instruments:
currency risk;
price risk; and
interest rate risk
The above risks may affect the Group income and expenses, or the value of its financial instruments. The Group exposure to and management of these
risks are explained below.

POTENTIAL IMPACT OF RISK MANAGEMENT POLICY SENSITIVITY TO RISK

1. CURRENCY RISK
The Group is subject to the risk that changes The Group is exposed to foreign exchange A 5% strengthening of the INR against key
in foreign currency values impact the Group risk arising from various currency exposures, currencies to which the Group is exposed (net
exports revenue and imports of raw material primarily with respect to US Dollar and Euro. of hedge) would have led to approximately an
and property, plant and equipment. The Group manages currency exposures additional ` 0 crores gain in the Statement of
As at 31st March, 2017, the net unhedged within prescribed limits, through use of Profit and Loss (2015-16: ` 0 crores gain). A 5%
exposure to the Group on holding financial forward exchange contracts. Foreign exchange weakening of the INR against these currencies
assets (trade receivables and Capital advances) transactions are covered with strict limits placed would have led to an equal but opposite effect.
and liabilities (trade payables and capital on the amount of uncovered exposure, if any, at
creditors) other than in their functional currency any point in time.
amounted to ` 5 crores payable (31st March, The aim of the Groups approach to management
2016: ` 8 crores). of currency risk is to leave the Group with no
material residual risk.

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 195

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

POTENTIAL IMPACT OF RISK MANAGEMENT POLICY SENSITIVITY TO RISK

2. PRICE RISK
The Group is mainly exposed to the price risk due The Group has laid policies and guidelines A 1% increase in prices would have led to
to its investment in debt mutual funds. The price which it adheres to in order to minimise pricing approximately an additional ` 23 crores gain in
risk arises due to uncertainties about the future risk arising from investments in debt mutual the Statement of Profit and Loss (2015-16: ` 13
market values of these investments. funds. crores gain). A 1% decrease in prices would have
At 31st March 2017, the investments in debt led to an equal but opposite effect.
mutual funds amounts to ` 2329 crores (31st
March, 2016:
` 1296 crores and 1st April, 2015: ` 974 crores).
These are exposed to price risk

3. INTEREST RATE RISK

The Group is mainly exposed to the interest rate The Group has laid policies and guidelines A 0.25% decrease in interest rates would have led
risk due to its investment in treasury bills and including tenure of investment made to minimise to approximately an additional ` 1 crores gain in the
government securities. The interest rate risk impact of interest rate risk Statement of Profit and Loss (2015-16: ` 1 crores
arises due to uncertainties about the future gain). A 0.25% decrease in interest rates would have
market interest rate of these investments. led to an equal but opposite effect.
The Group majorly invests in term deposits for
a period of less than one year. Considering the
short-term nature, there is no significant interest
rate risk pertaining to these deposits.
As at 31st March 2017, the investments in
treasury bill and borrowings amounts to ` 1192
crores (31st March, 2016: ` 1,233 crores and 1st
April, 2015: ` 1,946 crores). These are exposed to
interest rate risk.

C. MANAGEMENT OF CREDIT RISK

Credit risk is the risk of financial loss to the Group if a customer or counter-party fails to meet its contractual obligations.
Trade receivables
Concentrations of credit risk with respect to trade receivables are limited, due to the Groups customer base being large and diverse. All trade receivables
are reviewed and assessed for default on a quarterly basis.
Our historical experience of collecting receivables, supported by the level of default, is that credit risk is low and so trade receivables are considered to
be a single class of financial assets.
Refer note 2.4(f) for accounting policy on Financial Instruments.
Other financial assets
The Group maintains exposure in cash and cash equivalents, term deposits with banks, investments in treasury bills, government securities, money
market liquid mutual funds with financial institutions and derivative financial instruments.
The Groups maximum exposure to credit risk as at 31st March, 2017, 2016 and 1st April, 2015 is the carrying value of each class of financial assets.

43 DEFINED BENEFIT PLANS

Refer Note 2.4 (j) for accounting policy on Employee Benefits.
Description of Plans
Retirement Benefit Plans of the Group include Gratuity, Management Pension, Officers Pension and Provident Fund. Other post-employment benefit
plans includes post retirement medical benefits.
Gratuity is funded through investments mostly with an insurance service provider and partly through direct investment under Hind Lever Gratuity Fund.
Pension (Management Pension and Officers Pension) for most employees is managed through a trust, investments with an insurance service provider
and for some employees investments are managed through Group managed trust. Provident Fund for most of the employees are managed through trust
investments and for some employees through government administered fund. Post-retirement medical benefits are managed through investment made
under Group managed trust.

Annual Report 2016-17 Hindustan Unilever Limited

196 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
Governance
The trustees of the trust fund are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and
rules in the best interests of the plan participants. They are tasked with periodic reviews of the solvency of the fund and play a role in the long-term
investment, risk management and funding strategy.
Investment Strategy
The Groups investment strategy in respect of its funded plans is implemented within the framework of the applicable statutory requirements. The plans
expose the Group to a number of actuarial risks such as investment risk, interest rate risk, longevity risk and inflation risk. The Group has developed
policy guidelines for the allocation of assets to different classes with the objective of controlling risk and maintaining the right balance between risk and
long-term returns in order to limit the cost to the Group of the benefits provided. To achieve this, investments are well diversified, such that the failure
of any single investment would not have a material impact on the overall level of assets.
During the year the Group has amended its discretionary increase clause with respect to post retirement benefit plan, which has resulted into `115
crores credit to the Statement of Profit and Loss.
A. Balance Sheet
The assets, liabilities and surplus/(deficit) position of the defined benefit plans at the Balance Sheet date were:

Retirement Benefit Plans Other Post-Employment Benefit Plans

As at As at As at As at As at As at
31st March, 31st March, 1st April, 2015 31st March, 31st March, 1st April, 2015
2017 2016 2017 2016
Present value of obligation 2,426 2,320 2,130 163 147 137
Fair value of plan assets (2,378) (2,172) (1,977) (93) (92) (96)
(Asset)/Liability recognised in the 48 148 153 69 55 41
Balance Sheet
Of which in respect of:
Funded plans in surplus:
Present value of obligation 12 10 12 - - -
Fair value of plan assets (42) (47) (50) - - -
(Asset)/Liability recognised in the -* -* -* - - -
Balance Sheet*
*The excess of assets over liabilities
in respect of Officers Pension have
not been recognised as they are
lying in an Income Tax approved
irrevocable trust fund.
Funded plans in deficit:
Present value of obligation 2,414 2,310 2,119 163 147 137
Fair value of plan assets (2,366) (2,162) (1,966) (93) (92) (96)
(Asset)/Liability recognised in the 48 148 153 69 55 41
Balance Sheet

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 197

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
B. Movements in Present Value of Obligation and Fair Value of Plan Assets

Retirement Benefit Plans Other Post-Employment Benefit Plans

Plan Assets Plan Obligation Total Plan Assets Plan Obligation Total
As at 1st April, 2015 2,015 2,130 115 96 137 41
Current service cost - 75 75 - 0 0
Past service cost - - - - 0 0
Interest cost - 167 167 - 11 11
Interest income 178 - (178) 7 - (7)
Actuarial (gain)/loss arising from changes - - - - - -
in demographic assumptions
Actuarial (gain)/loss arising from changes (11) 7 18 (3) 2 5
in financial assumptions
Actuarial (gain)/loss arising from - 5 5 - 5 5
experience adjustments
Employer contributions 91 - (91) - - -
Employee contributions 131 131 - -
Assets acquired/ (settled)* (26) (26) - - - -
Benefit payments (169) (169) - (8) (8) -
As at 31st March, 2016 2,209 2,320 111 92 147 55

As at 31st March, 2016 2,209 2,320 111 92 147 55

Current service cost - 73 73 - 0 0
Past service cost - (115) (115) - - -
Interest cost - 171 171 - 11 11
Interest income 171 - (171) 7 - (7)
Actuarial (gain)/loss arising from changes - - - - -
in demographic assumptions
Actuarial (gain)/loss arising from changes 27 30 3 3 14 11
in financial assumptions
Actuarial (gain)/loss arising from experi- - 23 23 - (1) (1)
ence adjustments
Employer contributions 76 - (76) - - -
Employee contributions 129 129 - -
Assets acquired/ (settled)* (42) (42) - - - -
Benefit payments (162) (162) - (9) (8) -
As at 31st March, 2017 2,408 2,426 19 93 163 69
*On account of Business Combinations.

Annual Report 2016-17 Hindustan Unilever Limited

198 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
C. Statement of Profit and Loss
The charge to the Statement of Profit and Loss comprises:

Retirement Benefit Plans Other Post-Employment Benefit Plans

Year ended Year ended Year ended Year ended
31st March, 2017 31st March, 2016 31st March, 2017 31st March, 2016
Employee Benefit Expenses * :
Current service cost 18 19 0 0
Past service cost (115) - - 0
Finance costs * :
Interest cost 44 52 11 11
Interest income (42) (43) (7) (7)
Net impact on profit (before tax) (95) 28 5 4
Remeasurement of the net defined benefit
plans:
Actual return on plan assets (excluding
amounts in net finance
income/charge)
Actuarial gains/(losses) arising from changes - - - -
in demographic assumptions
Actuarial gains/(losses) arising from 20 16 11 5
changes in financial assumptions
Actuarial gains/(losses) arising from 0 (9) (1) 5
experience adjustments
Net impact on other comprehensive income 20 7 10 10
(before tax)
*Service cost and Finance cost has not been recognised in P&L for Officers Pension since it has excess Funds over Liabilities.

D. Assets
The fair value of plan assets at the Balance Sheet date for the defined benefit plans for each category are as follows:

Retirement Benefit Plans Other Post-Employment Benefit Plans

As at As at As at As at As at As at
31st March, 31st March, 1st April, 2015 31st March, 31st March, 1st April, 2015
2017 2016 2017 2016
Quoted
Government debt instruments 809 700 637 - - -
Other debt instruments 1,000 914 814 93 92 96
Total (A) 1,809 1,614 1,451 93 92 96
Unquoted
Other debt instruments 201 227 239 - - -
Others 398 368 325 - - -
Total (B) 599 595 564 - - -
Total (A+B) 2,408 2,209 2,015 93 92 96
Note: Assets to the extent of ` 42 crores is not recognised in Balance Sheet of Officers Pension Fund as they are lying in an Income Tax approved
irrevocable trust fund.
None of the plans invest directly in any property occupied by the Group or any financial securities issued by the Group.

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 199

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
E. Assumptions
With the objective of presenting the plan assets and plan obligations of the defined benefits plans at their fair value on the Balance Sheet, assumptions
under Ind AS 19 are set by reference to market conditions at the valuation date.

Retirement Benefit Plans Other Post-Employment Benefit Plans

As at As at As at As at As at As at
Financial Assumptions 31st March, 2017 31st March, 2016 1st April, 2015 31st March, 2017 31st March, 2016 1st April, 2015
Discount rate (per annum) 7.0% 7.8% 7.9% 7.0% 7.8% 7.9%
Salary Escalation Rate
(per annum)

Management employees- 7.0% 7.0% 7.0%
for first 5years

Management employees- 5.0% 5.0% 5.0%
after 5 years

Non-management Employees 8.0% 8.0% 8.0%
Pension Increase Rate 2.5% 2.5% 2.5%
(per annum)*
Annual Increase in Healthcare 9.0% 9.0% 9.0%
Costs (per annum)
*For management pension only

The estimates of future salary increases, considered in actuarial valuation, takes into account of inflation, seniority, promotion and other relevant factors,
such as supply and demand in the employment market.
Demographic Assumptions
Mortality in Service: Indian Assured Lives Mortality (2006-08) Ultimate table
Mortality in Retirement: LIC Buy-out Annuity Rates & UK Published PA (90) Annuity Rates suitably adjusted for Indian Lives.
F. Sensitivity Analysis
The sensitivity of the overall plan obligations to changes in the weighted key assumptions are:

Retirement Benefit Plans Other Post-Employment Benefit

Plans
Change in Change in plan Change in Change in plan
assumption (%) obligation (%) assumption (%) obligation (%)
Discount rate (per annum) Increase 0.5% -0.7% 0.5% -5.6%
Decrease 0.5% 0.7% 0.5% 6.2%
Salary Escalation Rate (per annum) Increase 0.3% 2.1% 0.3% 0.0%
Decrease 0.3% -2.0% 0.3% 0.0%
Pension Rate Increase 0.3% 2.4% 0.0% 0.0%
Decrease 0.3% -2.4% 0.0% 0.0%
Life Expectancy Increase 1 Year 1.9% 1 Year 4.0%
Decrease 1 Year -2.0% 1 Year -4.0%
Annual Increase in Healthcare Costs (per annum) Increase - - 1.0% 12.7%
Decrease - - 1.0% -10.7%
The sensitivity analyses above have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the
year and may not be representative of the actual change. It is based on a change in the key assumption while holding all other assumptions constant.
When calculating the sensitivity to the assumption, the same method used to calculate the liability recognised in the Balance Sheet has been applied.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared with the previous year.

Annual Report 2016-17 Hindustan Unilever Limited

200 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
G. Weighted average duration and expected employers contribution for FY 2017-18 for each of the defined benefit plan

Weighted average duration (yrs.)

Year ended Year ended Expected Employers
31st March, 2017 31st March, 2016 contribution for the
next year
Gratuity 10.9 10.4 43
Management Pension 6.9 8.5 1
Officers Pension 3.9 4.0 -
Provident Fund 15.2 14.5 62
Post-retirement medical benefits 11.9 11.5 -
Retirement One Time Gift Scheme 7.3 8.2 -

44 SHARE BASED PAYMENTS

Refer Note 2.4 (j) for accounting policy on Employee Benefits.
The members of the Company had approved 2001 HLL Stock Option Plan at the Annual General Meeting held on 22nd June, 2001. The plan envisaged
grant of share options to eligible employees at market price as defined in Securities and Exchange Board of India (Share Based Employee Benefits)
Regulations, 2014.
 his plan was amended and revised vide 2006 HLL Performance Share Scheme at the Annual General Meeting held on 29th May, 2006. This scheme
T
provided for conditional grant of Performance Shares at nominal value to eligible management employees as determined by the Compensation
Committee of the Board of Directors from time to time, at the end of 3-year performance period. The performance measures under this scheme include
group underlying sales growth and free cash flow. The scheme also provided for Par Awards for the managers at different work levels.
 he 2006 scheme was further amended and revised vide 2012 HUL Performance Share Scheme at the Annual General Meeting held on 23rd July,
T
2012. This scheme provided for conditional grant of Performance Shares at nominal value to eligible management employees as determined by the
Nomination and Remuneration Committee of the Board of Directors from time to time, at the end of 3-year performance period. The performance
measures under this scheme include group underlying sales growth, core operating margin improvement and operating cash flow.
 he number of shares allocated for allotment under the 2006 and 2012 Performance Share Schemes is 2,00,00,000 (two crores) equity shares of ` 1/- each.
T
The schemes are monitored and supervised by the Nomination and Remuneration Committee of the Board of Directors in compliance with the provisions of
Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and amendments thereof from time to time.
The Employee Stock Option Plan includes employees of Hindustan Unilever Limited, its subsidiaries and a subsidiary of parent Company.

Scheme Year Date of Numbers Vesting Conditions Exercise Period Exercise Price Weighted Average
Grant of options (`) per share Exercise Price (`)
granted per share
Vested after three
2001 HLL Stock 7 years from
2005 27-May-05 15,47,700 years from date of 132.05 132.05
Option Plan date of vesting
grant
Vested after three
2006 HLL 3 months from
2012 17-Feb-12 4,20,080 years from date of 1.00 1.00
Performance Share date of vesting
grant
Scheme
Interim 2012 30-Jul-12 51,385 1.00 1.00
2013 18-Mar-13 3,68,023 1.00 1.00
Interim 2013 29-Jul-13 25,418 1.00 1.00
Vested after three
3 months from
2014 14-Feb-14 2,62,155 years from date of 1.00 1.00
date of vesting
grant
2012 HUL Interim 2014 28-Jul-14 16,805 1.00 1.00
Performance
2015 13-Feb-15 1,42,038 1.00 1.00
Interim 2015 27-Jul-15 12,322 1.00 1.00
2016 11-Feb-16 1,57,193 1.00 1.00
Interim 2016 25-Jul-16 11,834 1.00 1.00
2017 13-Feb-17 1,23,887 1.00 1.00

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 201

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

Number of Share Options

Scheme Year Outstanding at Granted during Forfeited/ Exercised Exercisable at Outstanding at
the beginning of the year* Expired during during the year the end of the the end of the
the year the year year year

2001 HLL Stock Option - - - - - -

2005
Plan (23,100) - - (23,100) - -
- - - - - -
2012
2006 HUL performance (3,24,629) - - (3,24,629) - -
Share Scheme Interim - - -
2012 (39,937) (18,305) - (58,242) - -
3,08,705 - 3,08,705 - -
2013
(3,19,252) (55,602) - (66,149) (3,08,705) (3,08,705)
Interim 23,044 5,964 - 29,008 - -
2013 (25,418) - (2,374) - - (23,044)
2,31,763 - 41,918 74,955 1,14,890 1,14,890
2014
(2,43,708) - (11,945) - - (2,31,763)
Interim 16,805 - 1,702 - - 15,103
2014 (16,805) - - - - (16,805)
2012 HUL Performance 1,36,054 - 8,903 - - 1,27,151
2015
Share Scheme (1,42,038) - (5,984) - - (1,36,054)
Interim 12,322 - 632 - - 11,690
2015 - (12,322) - - - (12,322)
1,56,351 - 8,492 - - 1,47,859
2016
- (1,57,193) (842) - - (1,56,351)
Interim - 11,834 - - - 11,834
2016 - - - - - -
- 1,23,887 - - - 1,23,887
2017
- - - - - -
*Granted during the year includes additional shares granted upon meeting the vesting conditions
(figures in bracket pertain to 2015-16)
Weighted average equity share price at the date of exercise of options during the year was ` 864 (2015-16: ` 848)
Weighted average remaining contractual life of options as at 31st March, 2017 was 1.68 years (31st March, 2016: 1.34 years and 1st April, 2015: 1.34 years)
The value of the underlying shares has been determined by an independent valuer. The following assumptions were used for calculation of fair
value of grants in accordance with Black Scholes model:

Year ended Year ended

31st March, 2017 31st March, 2016
Risk-free interest rate (%) 6.6% 7.4%
Expected life of options (years) [(year to vesting) + (contractual option term)/2] 3.125 3.125
Expected volatility (%) 22.3% 26.3%
Dividend yield 1.9% 1.9%
The risk free interest rates are determined based on the zero-coupon sovereign bond yields with maturity equal to the expected term of the option.
Volatility calculation is based on historical stock prices using standard deviation of daily change in stock price. The historical period is taken into account
to match the expected life of the option. Dividend yield has been calculated taking into account expected rate of dividend on equity share price as on
grant date.

Annual Report 2016-17 Hindustan Unilever Limited

202 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
CASH SETTLED SHARE BASED PAYMENTS
The employees of the Company are eligible for Unilever PLC (the Holding Company) share awards namely, the Management Co-Investment Plan (MCIP),
the Global Performance Share Plan (GPSP) and the SHARES Plan. The MCIP allows eligible employees to invest up to 100% of their annual bonus in
the shares of the Holding Company and to receive a corresponding award of performance-related shares. Under GPSP, eligible employees receive
annual awards of the holding Companys shares. The awards under MCIP and GPSP plans will vest after 3-4 years between 0% and 200% of grant level,
depending on the satisfaction of the performance metrics. The performance metrics of both MCIP and GPSP are underlying sales growth, operating
cash flow and core operating margin improvement. Under the SHARES Plan, eligible employees can invest upto EUR 200 per month in the shares of the
Holding Company and after three years one share is granted free of cost to the employees for every three shares invested, provided they hold the shares
bought for three years. The Holding Company charges the Company for the grant of shares to the Companys employees at the end of the 3 years based
on the market value of the shares on the exercise date. The Company recognises the fair value of the liability and expense for these plans over the vesting
period based on the managements estimate of the vesting and forfeiture conditions.
The Company grants share appreciation rights (SARs) to eligible employees for all cash settled share based plans mentioned above that entitles them to
a cash/shares after three years of service. The amount of payment is also determined basis increase in the share price of the Holding Company between
grant date and the time of exercise.
Details of the liabilities arising from the Companys cash settled share based payment transactions:

As at As at As at
31st March, 2017 31st March, 2016 1st April, 2015
Other non-current liabilities 130 102 90
Other current liabilities 86 92 88
Total carrying amount of liabilities 216 194 178

Effect of share based payment transactions on the Statement of Profit and Loss:

Year ended Year ended

31st March, 2017 31st March, 2016
Equity settled share based payments 4 19
Cash settled share based payments 90 108
Total expense on share based payments 94 127

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 203

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
45 Related Party Disclosures
A. Enterprises exercising control

(i) Holding Company : Unilever PLC

B. Other Related Parties with whom the Company had transactions during the year

(i) Joint Ventures : Kimberly Clark Lever Private Limited

(ii) Key Management Personnel

(a) Executive directors : Sanjiv Mehta
PB Balaji
Pradeep Banerjee
Dev Bajpai
Geetu Verma
BP Biddappa
Priya Nair
Sandeep Kohli (with effect from 1st June, 2016)
Sudhir Sitapati (with effect from 1st July, 2016)
Srinandan Sundaram (with effect from 1st September, 2016)
Samir Singh (up to 31st May, 2016)
Punit Misra (up to 30th September, 2016)
(b) Non-executive directors : Harish Manwani
Aditya Narayan
S. Ramadorai
O. P. Bhatt
Sanjiv Misra
Kalpana Morparia

(iii) Employees Benefit Plans where there is significant influence : Hind Lever Gratuity Fund
The Hind Lever Pension Fund
The Union Provident Fund
Disclosure of transactions between the Group and Related Parties and the status of outstanding balances as on 31st March, 2017

Year ended Year ended

31st March, 2017 31st March, 2016
Holding Company : Dividend paid 1,839 1,727
Royalty expense 1,051 893
Income from services rendered 500 473
Expenses for Services received 96 -
Outstanding as at the year end :
- Trade payables [1st April, 2015: ` 137 crores] 344 176
Fellow Subsidiaries : Sale of finished goods / raw materials etc. 879 728
Purchased of fixed assets 40 -
Purchase of finished goods / raw materials etc. 614 419
Rent income 2 1
Sale of fixed assets - 0
Income from services rendered 12 17
Management fees paid 29 13
Dividend paid 561 527

Annual Report 2016-17 Hindustan Unilever Limited

204 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

Year ended Year ended

Joint Venture
(to the extent 50% holding)
Key Management Personnel
[Executive Directors]
Key Management Personnel
[Non-executive Directors]
Employees Benefit Plans where
there is significant influence
*As the liabilities for defined benefit plans are provided on actuarial basis for the Group as a whole, the amounts pertaining to Key Management Personnel are not included.
31st March, 2017 31st March, 2016
Royalty expense 17 11
Expenses shared by fellow subsidiaries 6 4
Maintenance and support costs for licences and 6 8
software
Reimbursements paid 49 105
Reimbursements received 34 32
Inter corporate loans given during the year - -
Inter corporate loans repaid during the year - -
Interest income - -
Outstanding as at the year end:
- Current account balances receivable with fellow 28 35
subsidiaries [1st April, 2015: ` 35 crores]
- Trade receivables [1st April, 2015: ` 139 crores] 133 174
- Trade payables [1st April, 2015: ` 77 crores] 218 136
: Purchase of finished goods / raw materials etc. 152 173
Reimbursements received 48 36
Investment in equity shares - 15
Outstanding as at the year end :
- Current account balances receivable with joint 12 14
ventures [1st April, 2015: ` 16 crores]
- Trade payables [1st April, 2015: ` 1 crores] 0 1
: Remuneration :
- Short-term employee benefits 45 34
- Post-employment benefits* 6 5
- Other long-term benefits*
- Termination benefits
- Share-based payments 16 13
Dividend paid 0 1
Consideration received on exercise of options 0 0
: Dividend paid 0 0
Commission paid 2 2
: Contributions during the year (Employers contribution only) 62 83
Outstanding as at the year end :
- Advances recoverable in cash or kind or for value to - 17
be received [1st April, 2015: Nil]
- Payables [1st April, 2015: ` 1 crore] 12 -

Terms and conditions of transactions with related parties

All Related Party Transactions entered during the year were in ordinary course of the business and are on arms length basis.
For the year ended 31st March, 2017, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (2015-
16: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the
related party operates.

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 205

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
46 BUSINESS COMBINATION
Refer note 3.A.(a) for treatment of business combination on first time adoption of Ind AS.
Refer Note 2.4 (p) for accounting policy on Business Combination.
Acquisition of Indulekha Brand
On April 07, 2016, the Company completed the acquisition of the flagship brand Indulekha from Mosons Extractions Private Limited (MEPL) and
Mosons Enterprises (collectively referred to as Mosons and acquisition of the specified intangible assets referred to as the Business acquisition). The
deal envisaged the acquisition of the trademarks Indulekha and Vayodha, intellectual property, design and knowhow for a total cash consideration of
` 330 crores (excluding taxes) and a deferred consideration of 10% of the domestic turnover of the brands each year, payable annually for a 5 year period
commencing financial year 2018-19. The transaction is accounted as business combination under Ind AS 103.
The acquisition is in line with the Companys strategic intent to strengthen its leadership position in Personal Care by providing an impetus to its play
in the evolving Premium Naturals segment. Indulekha brings to the Company, a premium brand with strong credentials around Ayurveda that will
complement its existing portfolio and strengthen its presence in the Hair Care category.
Purchase consideration transferred:
` Cr
Upfront cash consideration (including taxes) 348
Deferred contingent consideration 44
392
Deferred contingent consideration
The contingent consideration arrangement requires the Company to pay 10% of the domestic turnover of the brands each year, payable annually for a 5 year
period commencing financial year 2018-19. As on the acquisition date, the fair value of contingent consideration was valued at ` 44 crores.
The determination of the fair value as at balance sheet date is based on discounted cash flow method. Basis the domestic turnover of the brand, the
contingent consideration is subject to revision on a yearly basis. As at 31st March 2017, the fair value of the contingent consideration is ` 49 crores which
is classified as other financial liability.
Assets acquired and liabilities assumed:
The fair values of identifiable assets acquired and liabilities assumed as at the date of acquisition were:

` Cr
Specified Intangibles Assets
Indulekha Brand 311
Manufacturing Know-how and Design 59
Deferred tax asset 22
Total identifiable assets 392
Less: Liabilities assumed -
Total identifiable net assets 392
Goodwill 0
392
The deferred tax asset mainly comprises the effect of depreciation of intangible assets deductible for tax purposes.
Acquisition-related costs
In addition to cash consideration mentioned above, acquisition-related costs of ` 12 crores paid towards professional and legal fees, stamp duty etc. are
included in Exceptional Items in the Statement of Profit and Loss.
Impact of acquisition on the results
The acquired business contributed revenues of ` 75 crores and profit (before tax) of ` 7 crores to the Company for the year ended 31st March, 2017.

Annual Report 2016-17 Hindustan Unilever Limited

206 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
47 SEGMENT INFORMATION

Business Segments
The Group has determined following reporting segments based on the information reviewed by the Groups Chief Operating Decision Maker (CODM).
a) Home Care include detergent bars, detergent powders, detergent liquids, scourers, water business etc.
b) Personal Care include products in the categories of oral care, skin care (including soaps), hair care, deodorants, talcum powder, colour cosmetics,
salon services etc.
c) Foods include branded staples (atta, salt, bread, etc.) and culinary products (tomato based products, fruit based products, soups, etc.)
d) Refreshment include tea and coffee and frozen desserts.
e) Others include exports, infant care products etc.
The above business segments have been identified considering :
a) the nature of products and services
b) the differing risks and returns
c) the internal organisation and management structure, and
d) the internal financial reporting systems.
The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Management
Committee as explained in the Directors Report section.
Segment Revenue relating to each of the above domestic business segments includes Income from Services provided to group companies, where applicable.

Year ended 31st March, 2017 Year ended 31st March, 2016
External Intersegment Total External Intersegment Total
REVENUE
Home care 11,346 - 11,346 10,813 - 10,813
Personal care 16,432 - 16,432 16,128 - 16,128
Foods 1,124 - 1,124 1,096 - 1,096
Refreshment 4,848 - 4,848 4,475 - 4,475
Others 1,960 - 1,960 2,066 - 2,066
Total Revenue 35,710 - 35,710 34,578 - 34,578
RESULT
Home care 1,260 1,053
Personal care 3,852 3,801
Foods 85 111
Refreshment 755 679
Others 200 235
Total Segment 6,152 5,879
Un-allocated corporate expenses net of un-allocated income (271) (228)
Operating profit 5,881 5,651
Finance costs (35) (16)
Other Income 396 438
Profit before exceptional items and tax 6,242 6,073

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 207

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

Year ended 31st March, 2017 Year ended 31st March, 2016
External Intersegment Total External Intersegment Total
Exceptional items - income/(expenditure) - Segment
Home care (15) (10)
Personal care (37) (30)
Foods (1) (0)
Refreshment (4) (1)
Others (0) (57) 2 (39)
Exceptional items - income/(expenditure) - unallocated/corporate 294 8

Profit before tax 6,479 6,042

Tax expense
Current tax (1,947) (1,879)
Deferred tax charge/(credit) (30) 4
Profit for the year from Continuing Operations (A) 4,502 4,167

Share of net profit/(loss) from Joint venture accounted for using - (9)
equity method (B)

Profit for the year from Discontinued Operations (C) (12) (7)
Profit For the Year (A+B+C) 4,490 4,151
Less: Non Controlling Interest (14) (12)
Profit for the Year 4,476 4,139

OTHER INFORMATION
Segment Assets Segment Liabilities
As at As at As at As at
31st March , 2017 31st March, 2016 31st March , 2017 31st March, 2016
Home care 1,892 1,781 (2,337) (2,045)
Personal care 4,456 3,580 (3,851) (3,466)
Foods 300 319 (255) (286)
Refreshment 1,542 1,664 (807) (777)
Others 633 712 (300) (292)
Total 8,823 8,056 (7,550) (6,866)
Unallocated Corporate Assets / (Liabilities) 6,883 6,738 (1,390) (1,335)
Total Assets / (Liabilities) 15,706 14,794 (8,940) (8,201)

Annual Report 2016-17 Hindustan Unilever Limited

208 Consolidated

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)

Year ended 31st March, 2017 Year ended 31st March, 2016
Capital Depreciation/ Non-cash Capital Depreciation/ Non-cash
expenditure Amortisation expenses expenditure Amortisation expenses
other than other than
depreciation depreciation
Home care 367 78 7 247 60 10
Personal care 922 232 11 382 183 15
Foods 23 21 1 21 18 1
Refreshment 96 45 3 103 38 4
Others 32 21 3 27 17 5
Unallocated/Corporate 23 35 4 24 37 -

ADDITIONAL INFORMATION BY GEOGRAPHIES

Although the Groups operations are managed by product area, we provide additional information based on geographies.

Year ended Year ended

31st March, 2017 31st March, 2016
Revenue by Geographical Market
India 33,742 32,762
Outside India 1,968 1,816
35,710 34,578
Carrying Amount of Segment Assets
India 8,522 7,738
Outside India 301 318
8,823 8,056

Revenue from major customers

The Group is not reliant on revenues from transactions with any single external customer and does not receive 10% or more of its revenues from
transactions with any single external customer.

Notes

(a) Revenue comprises :

Year ended Year ended

31st March, 2017 31st March, 2016
Sale of products (including excise duty) 34,964 33,892
Income from services rendered 513 490
Salon services, Export incentives, scrap sales included in other operating income 233 196
Total 35,710 34,578

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 209

Notes
to the financial statements for the year ended 31st March, 2017 (Contd.)
(All amounts in ` crores, unless otherwise stated)
48 DISCLOSURE ON SPECIFIED BANK NOTES (SBNs)
During the year, the Company had specified bank notes (SBNs) and other denomination notes as defined in the MCA notification G.S.R. 308(E) dated 31st
March, 2017, on the details of Specified Bank Notes (SBNs) held and transacted during the period from 8th November, 2016 to 30th December, 2016, the
denomination wise SBNs and other notes as per the notification is given below:

(Amount in `)
SBNs* Other denomination notes Total
Closing cash in hand as on 8th November, 2016 31,36,500 5,96,220 37,32,720
(+) Permitted receipts - 1,48,53,904 1,48,53,904
(-) Permitted payments - 9,64,610 9,64,610
(-) Amount deposited in banks 31,36,500 1,35,64,757 1,67,01,257
Closing cash in hand as on 30th December, 2016 - 9,20,757 9,20,757

* For the purpose of this clause Specified Bank Notes shall have the same meaning provided in the notification of the Government of India, in the
Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8th November, 2016.

49 The Group has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable
losses. At the year end, the Group has reviewed and ensured that adequate provision as required under any law/accounting standards for material
foreseeable losses on such long term contracts (including derivative contracts) has been made in the books of accounts.

As per our report of even date For and on behalf of Board of Directors

For B S R & Co. LLP Sanjiv Mehta PB Balaji

Firm Registration No. 101248W/W - 100022 Managing Director and CEO Executive Director
Chartered Accountants [DIN: 06699923] (Finance & IT) and CFO
[DIN: 02762983]

Akeel Master Aditya Narayan Dev Bajpai

Partner Chairman - Audit Committee Executive Director
Membership No. 046768 [DIN: 00012084] Legal and Company Secretary
Membership No. FCS 3354

Aasif Malbari
Group Controller
Mumbai: 17th May, 2017 Mumbai: 17th May, 2017

Annual Report 2016-17 Hindustan Unilever Limited

210 Consolidated

FORM AOC-1
to the financial statements for the year ended 31st March, 2017
(All amounts in ` crores, unless otherwise stated)

Statement containing salient features of the consolidated financial statements of subsidiaries/joint venture

Part A: Subsidiaries
Bhavishya
Unilever Unilever Unilever Lakme Jamnagar Daverashola Levers
Pond'S Hindustan Alliance Hindlever Levindra
Name of the India Nepal Nepal Lever Properties Estates Associated
Exports Unilever Child Trust Trust
subsidiary Exports Limited - Limited - Private Private Private Trust
Limited Foundation Nutrition Limited Limited
Limited Indian Rs Nepalese Limited Limited Limited Limited
Initiatives
(note i and ii)
1 The date 26/06/1963 15/10/1998 22/06/1992 19/12/2008 16/10/2006 16/03/2005 19/12/2012 12/03/2015 01/04/1958 11/12/1946 11/12/1946
since when
subsidiary
was acquired
2 Reporting 31/03/2017 31/03/2017 16/07/2016 31/03/2017 31/03/2017 31/03/2017 31/03/2017 31/03/2017 31/03/2017 31/03/2017 31/03/2017
period (Ashaad, 31, 2073)
3 Share capital 3 2 6 9 36 5 0 0 0 0 0 0
4 Reserves & 317 (7) 103 164 141 (5) 4 2 0 (0) (0) (0)
surplus
5 Total assets 808 15 309 494 434 - 4 3 0 0 0 0
6 Total 487 19 200 321 257 - 0 1 0 - - -
Liabilities
7 Investments 269 - - - - - - - - - - -
8 Turnover 1,204 88 315 504 247 - - 23 9 - - -
9 Profit / 138 (13) 91 145 13 (4) - 3 1 (0) (0) (0)
(loss) before
taxation
10 Provision for (49) 1 (21) (34) - - - - (0) - - -
taxation
11 Profit /(loss) 89 (12) 69 111 13 (4) - 3 0 (0) (0) (0)
after taxation
12 Proposed - - - - - - - - - - - -
Dividend
13 % of 100% 90% 80% 100% 100% 100% 76% 100% 100% 100% 100%
shareholding

Note:
i) Converted into indian Rupees at the Exchange rate INR 1 = 1.6 Nepalese Rupees
ii) The financial statements have been audited by a firm of Chartered Accountants other than B S R & Co. LLP.

Hindustan Unilever Limited Annual Report 2016-17

 Overview Reports Financial Statements 211

FORM AOC-1
to the financial statements for the year ended 31st March, 2017
(All amounts in ` crores, unless otherwise stated)

Statement containing salient features of the consolidated financial statements of subsidiaries/joint venture

Part B: Joint Venture

Name of the Joint Venture Kimberly - Clark Lever Private Limited (Refer note ii above)
1 Latest audited Balance Sheet Date 31st March, 2017
2 Date on which Joint Venture was associated or acquired 20th September, 1994
3 Shares of Joint Ventures held by the Company on the year end
i) Number 4,51,69,778
ii) Amount of Investment in Joint Venture 51
iii) Extend of Holding% 50%
4 Description of how there is significant influence Joint venture agreement
5 Reason why the joint venture is not consolidated Not applicable
6 Net worth attributable to shareholding as per latest audited Balance Sheet 14
7 Loss for the year
i) Considered in Consolidation -
ii) Not Considered in Consolidation (12)
Note:
a) Refer note 1. d of the consolidated financial statements for information on associates

For and on behalf of Board of Directors

Sanjiv Mehta PB Balaji
Managing Director and CEO Executive Director (Finance & IT)
[DIN: 06699923] and CFO
[DIN: 02762983]

Aditya Narayan Dev Bajpai

Chairman - Audit Committee Executive Director Legal and
[DIN: 00012084] Company Secretary
Membership No. FCS 3354

Aasif Malbari
Group Controller

Mumbai: 17th May, 2017 Mumbai: 17th May, 2017

Annual Report 2016-17 Hindustan Unilever Limited

212 Others
Awards and recognition
OUR BRANDS
HUL won the Client of the
Year title at the Effies 2016
Awards; a total of 12 awards
- two Gold, five Silver and five
Bronze awards
Brooke Bond Red Label Teas
6-Pack Band campaign
bagged the Grand Prix Glass
Lions at the Cannes Lions 2016
HUL was recognised as the
top Indian FMCG, and as one
of Indias Top 500 Companies
at the Dun & Bradstreet
Corporate Awards 2016
HUL reclaimed the Media
Client of the Year title at
EMVIES 2016 with a record-
breaking performance,
winning a total of 35 metals - 8
Gold, 16 Silver and 11 Bronze
HUL was honoured with the
Best Digital Business of the
Year Award at the 2016 CMO
Asia Awards held in Singapore
HUL bagged the Client of the
Year title at the Campaign India
Digital Crest Awards (CIDCA)
2016 for the second year in a
row for excellence in digital
marketing and advertising
Lifebuoy, Fair & Lovely, Lux and
Brooke Bond were featured in
the top 20, in the 2016 edition
of Brand Footprint, the IMRB
Kantar World panels annual
ranking of the most chosen
consumer brands in India,
published by Mint
Clinic Plus won in both the
India Star and the Asia Star
competitions for excellence in
packaging design, innovation
and sustainability
Hindustan Unilever Limited Annual Report 2016-17
Kissan Tomato Ketchup
bagged a Silver for its
Kissanpur Where
Experiences Happen
campaign in The Effectiveness
Award category, at the Festival
of Media- Asia (FOMA) awards.
OUR OPERATIONS
HUL was declared the winner
in the Operational Excellence
in Cold ChainFMCG category
at the Cold Chain Industry
Awards 2016 presented by
Future Supply Chain
HULs Pune Tea Exports
factory won the National
Energy Conservation Award
2015-16 (second prize in Foods
Processing Category)
HULs Pondicherry HPC
factory won Frost & Sullivans
prestigious IMEA (Indian
Manufacturing Excellence)
Award. The Unit received
a Gold Award as the first
runner-up in the FMCG -
Large Business Category
HULs Chhindwara Detergent
factory was awarded in the
Shresth category of the
Detergent segment by the
National Safety Council,
Madhya Pradesh
HULs Hosur Factory and
Kandla Exports Factory
bagged a Gold Award each
in the FMCG Sector category
at the 15th Annual Greentech
Safety Awards 2016 for
outstanding achievements
in Safety Management. Goa
Factory won a Silver Award
OUR PEOPLE
Dr. Thirumalai Rajgopal, Vice
President, Global Medical &
Occupational Health, Unilever
won the prestigious Dr. B.C
Roy National Award for his
outstanding service in the field
of Socio Medical Relief for the
year 2016
Our CEO, Sanjiv Mehta
was recognised as The
Outstanding CEO of the Year
at the CEO AWARDS 2016
Businessworld magazine
conferred the Best CFO
Award upon our CFO,
P.B. Balaji in the category of
Best MNC-Large at the BEST
CFO AWARDS 2015-16
HUL has been recognised
as one of the Top 10 Best
Companies for Women in
India by The Best Companies
for Women in India (BCWI)
Study 2016, instituted by
Working Mother in partnership
with the AVTAR Group
As per the latest Nielsen
Campus Track Business
School Survey, HUL has
emerged as the No. 1
Employer of Choice for
B-School students. In addition,
HUL has retained the Dream
Employer status and continues
to be the top company
considered for application by
B-School students.
HUL has been honoured with
the Gold Award for Healthy
Workplace by the Arogya
World-India Healthy Workplace
Award Program
SUSTAINABILITY
HUL won the Best
performance Award in the
MSME category at the Odisha
State Energy Conservation
Awards 2016
The CII sustainability team
recognised our Khamgaon
factorys contribution towards
environment management
by bestowing upon us the
prestigious CII Sustainability
Award 2016 for Environment
Management
HULs Dapada factory has been
declared as the winner of the
Civic Awards in the category
of Sustainable Environment
Initiatives by Bombay
Chamber of Commerce and
Industry
HULs Pondicherry, Dapada
and Gandhidham factories
received the Frost & Sullivan
sustainability awards in the
Sustainability Leaders Award
category
HULs Mysore factory was
honoured with the Innovative
Project title for Best Practices
in Renewable Energy and GHG
Emission Reduction at the
GreenCo Best Practices Award
2016
 Registered Office: Unilever House, B. D. Sawant Marg, Chakala, Andheri (East), Mumbai - 400 099
CIN: L15140MH1933PLC002030, Web: www.hul.co.in, Email: levercare.shareholder@unilever.com, Tel: +91 22 39832285 / 39832452

Form No. MGT-11

PROXY FORM
[Pursuant to Section 105(6) of the Companies Act, 2013 and Rule 19(3) of the Companies (Management and Administration) Rules, 2014]

Name of the Member(s):

Registered address :

Email Id: Folio No. / DP ID and Client ID:

I/We, being the Member(s) of shares of the above named Company, hereby appoint
1. Name: E-mail ID:
Address:
Signature: , or failing him/her
2. Name: E-mail ID:
Address:
Signature: , or failing him/her
3. Name: E-mail ID:
Address:
Signature:
as my/our proxy to attend and vote, in case of a poll, for me/us and on my/our behalf at the 84th Annual General Meeting of the Company, to be
held on Friday, the 30th day of June, 2017 at 3.30 p.m. at the Registered Office of the Company and at any adjournment thereof in respect of such
resolutions and in such manner as are indicated below:

Reso. No. Description For* Against*

1. Adoption of Financial Statements together and Reports thereon for the financial year ended
31st March, 2017
2. Confirmation of interim dividend and declaration of final dividend
3. Re-appointment of Mr. Harish Manwani as Director
4. Re-appointment of Mr. Pradeep Banerjee as Director
5. Re-appointment of Mr. P. B. Balaji as Director
6. Ratification of the appointment of M/s. BSR & Co. LLP, Statutory Auditors and to fix their remuneration
for the financial year ending 31st March, 2018
7. Increase in overall limits of Remuneration for Managing / Whole-time Director(s)
8. Appointment and terms and conditions of appointment of Mr. Dev Bajpai as a Whole-time Director of the
Company for a period of 5 years w.e.f. 23rd January, 2017
9. Ratification of the remuneration of M/s. RA & Co., Cost Accountants for the financial year ending
31st March, 2018
Signed this day of 2017.

Affix
Signature of Shareholder (s) Revenue
Stamp
Notes:
* 1. Please put a X in the Box in the appropriate column against the respective resolutions. If you leave the For or Against column
blank against any or all the resolutions, your Proxy will be entitled to vote in the manner as he/she thinks appropriate.
2. A Proxy need not be a Member of the Company. Pursuant to the provisions of Section 105 of the Companies Act, 2013, a person can
act as proxy on behalf of not more than fifty Members and holding in aggregate not more than ten percent of the total Share Capital
of the Company carrying voting rights. Members holding more than ten percent of the total Share Capital of the Company carrying
voting rights may appoint a single person as Proxy, who shall not act as Proxy for any other Member.
3. This form of Proxy, to be effective, should be deposited at the Registered Office of the Company at Unilever House, B. D. Sawant Marg,
Chakala, Andheri (East), Mumbai - 400 099 not later than FORTY-EIGHT HOURS before the commencement of the aforesaid meeting.
Notes
Notes
 FOR FURTHER INFORMATION ON OUR ECONOMIC,
ENVIRONMENTAL AND SOCIAL PERFORMANCE,
PLEASE VISIT OUR WEBSITE:
WWW.HUL.CO.IN

HINDUSTAN UNILEVER LIMITED

Registered Office:
Unilever House,
B. D. Sawant Marg, Chakala,
Andheri (East),
Mumbai - 400 099
CIN : L15140MH1933PLC002030 Designed & Printed by Burda Druck India Private Limited